As with the Christmases of my childhood, the starting gun of the cracker will commence this year’s festive lunch, signalling the calm before the digestive storm. Once more, opponents will feel the tension as a volley of sharp snaps sound across a laden table. Who gets the prize? It’s 50/50.
As we head into the holiday period, 50/50 is how financial services professionals fall in when considering if their sector will remain as influential once we’re outside the EU. According to our research*, 50% believe we’ll maintain our position; 50% feel we won’t. Indeed, 3 in 5 think the industry is incapable of influencing the political tug of war that is the Brexit negotiations.
So, once all the talk is done, can the UK’s financial services keep its paper crown?
Unlike the cracker’s contents (well mine, at least) the prize is considerable. The sector sustains 2.2 million jobs and 11% of the UK’s total economic output. This is surely worth fighting for.
Yet those who work in financial services don’t think politicians see it that way. The majority (60%) believe there isn’t enough political capital in fighting for the sector that raises capital, because “being seen to listen to the City’s financial services sector alienates politicians from the voters”. This is connected, in part, by a shift to the left among younger voters – a trend that 40% believe threatens financial services’ license to operate in the UK.
One way to increase influence, to help politicians publicly show support for the UK’s financial services, is, in the opinion of the industry, to take a more values-led approach to how it communicates. As the Remain campaign demonstrated, the economic rationale doesn’t resonate. It will fail to convince politicians and the public if it sings only “we contribute more to the UK economy than any other sector” this Christmas.
Instead, people need to understand the impact of financial services on their day-to-day lives. We increasingly expect big business to be a progressive and positive force in society and we want corporate values to align with our own.
At a recent Linstock Thinking Out Loud dinner we heard the asset management industry is picking up greater scrutiny in this regard. Last year’s Market Study by the FCA, exploring fees and customer value among other things, has increased the pressure. Diversity within asset management has come under a more powerful microscope, too, with those firms not signed up to the Women in Finance Charter likely to be hauled up before select committee hearings soon.
So, this is the challenge. But it is also the opportunity. If the asset management sector is going to be pushed into the glare then this is a chance to step up and demonstrate its relevance. Its purpose in our society. The fact it creates jobs, taxes. The fact that, through its work we can all hopefully retire, having built up more money in our pension than we put in. That, by a mechanism which puts investors in partnership with those who need investment, we can fuel company growth and build infrastructure.
To avoid the joke landing on them as the Brexit cracker spills open, financial services firms must show their worth. Only then will the sector have the collective pulling power it deserves.
* This piece is based on a piece of research among financial services firms carried out by Linstock in November 2017.