Dueling visions: Ready or not, the demand for transparency is forcing societal change, and it’s good a thing

As I sit and read about the impacts of the Panama Papers and Saudi Arms deals, I am amazed by how the demand for transparency in today’s society has changed all aspects of our lives, including the financial industry.

Since the advent of social media, our society has continued to evolve in order to account for new technologies and tools. These have ushered in an era that has altered the way we communicate and consume information on a daily basis, placing greater emphasis on one’s ideas. The phone or pen are no longer the only options when communicating with others. People can tweet and text, choosing to broadcast their thoughts to thousands of people in a matter of seconds.

More interesting, however, is the way social media has helped nurture and accelerate the trend towards transparency. Now more than ever we are seeing a collective demand for greater clarity which has primarily been brought on by virtual communities. Whether we are talking about politics, sports, business or even our own lives, every aspect of the way we interact with these groups is scrutinized instantly when information is not readily available or presented in an accurate manner.

The impact of not being honest and truthful from the beginning can be devastating to a company’s reputation, and in some cases, their entire business. As a result, we’ve seen some established organizations attempt to appease their customers by pre-emptively disclosing information that never would have been released in the past. We’ve also seen a growing trend of businesses utilizing transparency as a core advantage to their business model, disclosing every aspect of their operations in an effort to give consumers and investors a better sense of their underlining business and values. A great example of this is Everlane. They’ve pulled back the curtain on all aspects of their operations, including the cost of labour and the working conditions in each of their factories. This amazing trend is going to be the way of the future. With a wealth of information already at their fingertips, consumers can expect this trend to intensify over the years as companies begin to transition away from the dark ages of opacity.

Transparency has always been something I believe in – from the way I built Claymore to how we operate here at Purpose. It plays a significant role in everything I do, and it is one of my core values. I’ve always felt that customers should understand our business, products, and investments. This ideology has engrained itself into every level of the business – from the way we build our portfolios, to the way we price our products and manage our money every single day. If our investors understand how and why we act in certain ways, they will be more comfortable with our business and can trust in the fact that transparency will always be there for them.

In the financial services industry, we are seeing a great trend towards transparency. Many companies like us are leading the way, as investors increasingly demand to be kept informed. In a way, transparency is the great equalizer. It enables less sophisticated investors to become more engaged and ensures that information is not just limited to the few. This has significantly bolstered the financial industry on a number of levels, as consumers are able to grow and become more knowledgeable about the financial landscape.

One area we hope this leaves a meaningful impact on is the alternatives product industry. For quite some time, alternative investments have been criticized for their lack of transparency strictly because of the black box nature of their investment strategies. This poses a challenge, as we believe alternatives will likely play a critical role in many portfolios as we move into a new economic cycle and need different risk management tools. Needless to say, the industry needs to tackle this issue head on, creating innovative structures that place an emphasis on trust and transparency.

With Claymore we had a great impact on improving our overall industry. Now at Purpose we’re hoping to continue this focus, but also extend our impact to the alternative investment segment of the industry.

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