Survey: Financial Planners More Honest than Brokers, But Insurance Agents Rank Lower
In an investor confidence survey by TowersGroup, financial planners received among the highest ratings for honesty and integrity while stockbrokers received among the lowest.
TowersGroup, a New York-based management firm that measures reputations, asked investors to rate the honesty and integrity of a group of financial professionals – including brokers and financial planners -- on a one to five scale, with one being the lowest.
Thirty-six percent of investors gave stockbrokers a one or two rating, tying them with corporate management executives as the lowest rated groups in the survey. Only insurance salespeople received lower scores.
Meanwhile, groups with the highest scores (four or five) were bankers, who received the high scores from 39 percent of respondents, followed by mutual fund company executives (38 percent), and then financial planners, who were given the highest grades by 37 percent of the respondents.
TowersGroup conducted the survey as a result of the collapse and deception of Enron. Surprisingly, despite the Enron debacle, 34 percent of respondents gave accounting firms the highest trust rankings. Respondents were divided on the honesty and integrity of securities analysts, who have been criticized for their coverage of Enron and investment banking conflicts. Twenty-nine percent of respondents gave analysts the lowest ratings and 21 percent gave them the highest.
“It’s amazing to me that we received lower ratings than analysts,” says a Merrill Lynch broker in the Southeast. “Frankly, it’s appalling. It’s discouraging. They’re the ones who deserve much of the criticism, not us. That just shows that the public is not informed, and that we [brokers] still have an uphill battle with our image.”
Overall, the survey found that the Enron case did a number on investor confidence – shattering it. In the aftermath of the energy company’s collapse, 43 percent of investors have less confidence in the stock market, and only 23 percent believe strongly in the stock market's ability to reflect the fair value of stocks.
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