April 25, 2016

Populism is Here to Stay: What Now?

Economic populism is on the rise. The surprising popularity of Donald Trump and Bernie Sanders underscores growing and significant resentment towards big business, Washington and Wall Street. This certainly is cause for some concern for Corporate America and many of our agency’s clients—banks, financial services firms, and asset management and wealth managers—who all fall under that “Wall Street” moniker.

While populist sentiment has been building for years (remember the rise of the Tea Party about five years ago?) and should come as no surprise to anyone who has been following the presidential campaign, I was struck by the following comment from an unnamed CEO of a tech company in a front-page article in today’s Wall Street Journal, “the center has collapsed. Sanders and Trump will go away but their supporters won’t.”

I’m not a political pundit and don’t want to handicap either Trump’s or Sander’s staying power, but I do need to make sure that our agency’s clients—those businesses that are the very essence of “Wall Street”—are ready to face to the growing populist sentiment and the potential backlash against their businesses and reputations.

Here are three issues facing our clients—and how they can protect themselves from the populist surge:

1) Institutional managers, including hedge and private equity firms, oversee hundreds of billions, if not trillions, of dollars in the pensions of “Middle America”—ironically many of the people angriest with Wall Street. These managers need to explain to their clients—who are often comprised of fire fighters, police, teachers and other unionized workers—that they are helping them to build their nest eggs so that they can retire more comfortably. These managers need to show their clients and constituents that they are their allies, not their enemies.

2) Similarly, wealth managers whose clients include many working class families and individuals—and not necessarily the rich—need to explain to their clients how a new president and Congress might affect their investment strategies moving forward. In order to better market and gain new clients, they need to become pseudo policy experts, as an increasingly confused and aging Baby Boomer population turns to them to manage their personal wealth and retirement savings.

3) Finally, “Wall Street” firms or companies tied to the financial industry need to understand the changing media landscape. These firms are no longer getting “free passes” from the media, as editorial pressures are driving reporters to dig deeper to find these companies’ potential fault lines. The new wave of populist sentiment—in combination with the financial crisis, Madoff, and countless other scandals—is increasing media scrutiny on these companies. This doesn’t change the need for financial firms to proactively market themselves. It does mean, however, that they need to refine the messages they are communicating to their clients and the media in order to adapt to the broader changes among the population.

As my favorite musician Bob Dylan famously said, “the times they are a changing.” Financial firms would be wise to heed these words and adjust their communications and marketing strategies accordingly.

By: Richard Dukas