A good reputation, once lost, can be very difficult to regain. Companies with a tarnished reputation will face an uphill struggle to achieve customers’ trust. Notwithstanding this, those financial services firms that actively work to rebuild their reputations should find, in time, that they are distinguished from the wider industry not just by their customers, but by investors. Having a strong brand helps to prevent the commoditisation of a company’s products or services. Customers will buy from a brand they trust, something that is particularly true in financial services. Trusted brands therefore tend to have a loyal and growing client base. A solid customer base plus a strong competitive position are highly desirable attributes and something on which potential investors will place a premium value. Maintaining a company’s reputation can pay double dividends. The company itself will gain more customers and so will grow revenues and profits. Additionally, the company will be an attractive investment and therefore will expand its shareholder base and generate further cashflows. There may be no accounting for taste, but there certainly is accounting for trust and perhaps this is the biggest potential value in many companies – financial services firms included.
James Bateman is head of multi-manager and multi-asset portfolio management for Fidelity Worldwide Investment
