Erica Elliott Richardson: Financial Institutions Must Engage The Government Early On
This fall, we welcomed Dr. Erica Elliott Richardson to our Strategic Communications team. Richardson has extensive experience in public affairs and government engagement covering both the public and private sectors, with deep financial services expertise around communications, regulatory issues, and international government relations. Most recently, she served as Director of External Affairs at the Commodity Futures Trading Commission (CFTC), a role appointed by the Executive Office of the President.
Give us more insight into your background and what brought you to FTI.
I started on Capitol Hill in 2008, right at the beginning of the financial crisis. I had no financial services background and no orientation to the industry or the issues. Immediately, I saw what a huge difference it made when players in the industry, as well as the industry at large, started communicating early and effectively.
Any slight shift in public sentiment translated into action from Congress and often resulted in legislative action. Businesses took communication for granted and that translated into business value being put at risk. Engaging in D.C. is so important for every industry. Unfortunately, many fail to recognize such, “Well, we are not regulated and we don’t want to be, so why would we engage in D.C.?” My time on Capitol Hill taught me that not engaging policymakers means you have no relationships, and when your enterprise value is at risk, not having any relationships is a problem. That congressional and legislative perspective I gained early in my career helped me see the things that impact a regulator’s view.
Can you describe the various complexities of working with financial service clients from a government relations standpoint?
What financial services companies do is often very complex. That complexity translates into confusion, which tends to bring up negativity. Too often, when Financial services companies try to demonstrate their value, they explain things with such technical language that it flummoxes the average person and fails to articulate why their value is even meaningful.
That confusion also impacts politicians. If politicians don’t understand what you do, you become an easy target. People are angry and looking for somebody to blame. If a company can’t articulate its value to the broader society they become incredibly vulnerable.
Main street America thinks derivatives are to blame for the financial crisis. Frankly, derivatives are incredible tools of risk management and the causes of the 2008 financial crisis were far more complex than that. The industry, however, did a very poor job defending itself and allowed itself to become a pop culture boogeyman.
Do you think they didn’t realize they needed to defend themselves?
Oftentimes if you’re a business leader, you’re there because you’re good at what you do, and you probably don’t think about stakeholder mapping and brand management and ways that you can manage your political risk, because that’s not what you do. That is, however, what we do at FTI. We help businesses see how thinking more globally, more “big picture” about their stakeholders, is simply required in the modern-day political and media landscape.
Recently, the Business Roundtable, a trade association in DC, issued a document called, “Statement on the Purpose of a Corporation.” This statement, signed by 181 CEOs, declared they were pivoting away from shareholder primacy as the purpose of a corporation, instead, pivoting to all stakeholders – customers, employees, suppliers, communities, and shareholders. Businesses are being held to higher standards, where politics no longer start and stop in D.C., and that’s something every single business must factor into their communications.
What do you think the financial industry misunderstands about government workings?
They tend to think in terms of concrete facts, “Well, we haven’t broken any laws, so why would the government care?” We are in a political environment where it is no longer good enough to just be “right”. You can be “right” and still be losing. You can win a legal trial and lose in the court of public opinion.
Politicians are under enormous pressure from the public. So, a company may be doing all the “right” things according to their compliance director and general counsel, and yet, still turn themselves into very attractive targets for Washington, D.C.
Every day Congress is working to get results for their constituents back home. This manifests itself in a variety of ways, from needing to move legislation or leading an investigation. If their constituents are angry about something or have populist outrage towards an industry or company, that will motivate an elected official to engage on an issue. You don’t have to break the law to become a target for government investigation.
What do you tell potential clients about why they might need you and your team’s expertise?
Not having a D.C. strategy, not having a government engagement strategy, that is no longer an option. You can no longer close your eyes and hope Washingon doesn’t notice you. Engaging early and often is the best way to protect yourself, because when you’re in crisis, it’s not the time to try and make new friends.
The US government historically has a very pro-innovation approach to growth and regulation. Businesses often think of engaging Washington regulators after-the-fact; when they are under threat of regulation or investigation. Instead, it should be an iterative dialogue and relationship. Many regulators have opened innovation labs designed to engage emerging companies and industries, and members of Congress are especially interested in supporting innovation and job growth in their regions.
Coming into an election year, does it make it more complicated?
Election years force businesses to make government engagement top of mind. People are keenly aware of the impact various candidates might have on the business climate if elected. Businesses should keep in mind that a policymaker doesn’t have to win an election to have a dramatic impact. Senator Elizabeth Warren, a significant thought-leader throughout the 2008 financial crisis and the ensuing Dodd-Frank reform, effectively created the Consumer Financial Protection Bureau without being in office.
Don’t wait for the outcome before taking action. Your competitors are engaging now.”Hedging your bets” on the election is a great way to lose. If, for example, there is a party change, the new transition team will be meeting literally the day after the election to start making plans for new leadership and policy. The day after the election is too late.
What are you looking forward to in the coming year?
I’m looking forward to offering a unique and holistic approach to engage policymakers in Washington, and financial centers around the world, to deliver real results that help a company’s bottom line. Our sophisticated approach to solving business problems means that we are well-positioned to deliver incredible value for our clients. With FTI’s global platform, we have the opportunity to be full service across so many different industries around the world.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting LLP, its management, its subsidiaries, its affiliates, or its other professionals, members or employees.