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When financial crisis escalated, firms failed to communicate with worried investors

When the financial crisis escalated with the fall of Lehman Brothers, the AIG bailout and the sale of Merrill Lynch two weeks ago, firms failed to communicate sufficiently well online with their client base, according to a report.

When the financial crisis escalated with the fall of Lehman Brothers, the AIG bailout and the sale of Merrill Lynch two weeks ago, firms failed to communicate sufficiently well online with their client base, according to a report.The report found that 60% of the 101 top financial firms surveyed did not outwardly acknowledge at all the financial crisis to their clients.

Eleven firms distributed timely emails to clients - but several of these sent "lengthy, legal-type compliance documents, which made no mention of the fact that assets would become part of another firm due to a merger taking place," the Corporate Insight report noted.

Overall, just four firms posted both market-related homepage content about the crisis and sent emails to clients. These were Charles Schwab, Fidelity, iShares and Merrill Lynch.

"Utilizing both of these powerful mediums was the most effective way to reach out to investors during last week's market turmoil," the report said.

Meanwhile, despite growing concerns from investors, only six firms provided letters from upper management addressing their firm's exposure in light of the crisis.

Only five firms posted homepage images or messages focusing on Money Market Funds.

Just three firms offered video messages from their CEO.

The report, entitled "Market Messaging During the Financial Crisis," found that many of those that did post online responses to the crisis made it a point to distance themselves from toxic investments.

Many also highlighted earnings in a bid to prove their strong financial standing.

"Others saw the crisis as an opportunity to prey on struggling competitors and expand their customer bases," the report found.

"As the financial crisis affected some firms more than others, we saw varying response levels. AIG and Merrill Lynch both made adequate attempts to calm investor fears online. Washington Mutual also made reassurances online last week, however they failed to address their well-known solvency issues and rumors about their ability to remain an independent company," the study found.

"It was only after their acquisition was complete that the firm posted a public homepage image leading to a Chase message for Washington Mutual customers. The firm's lack of openness with their clients during the crisis was inexcusable."

On the other hand, Corporate Insight highlighted Charles Schwab as one of the stand-outs during the crisis.

"Charles Schwab's email [to investors] went at the heart of the matter concerning people watching banks fail - the firm is in good financial standing. In other words, your money is safe with them so don't worry. If we had to pick out one response as providing the best reassurances, this would be it," Tim Ullrich, VP of Monitor Services at Corporate Insight told WS&T.

Read more about the crisis fallout across other sectors of the financial services industry.When the financial crisis escalated with the fall of Lehman Brothers, the AIG bailout and the sale of Merrill Lynch two weeks ago, firms failed to communicate sufficiently well online with their client base, according to a report. Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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