Simplicity and a personal touch will win over financial customers

You may have thought politicians were one of the least trusted groups in the United States. However, research has shown that financial services falls into that category as well.

The good news, according a new report from the American College of Financial Services Cary M. Maguire Center for Ethics, shows a newer, more optimistic outlook for financial services. Gathering information from 2,000 customers the Center for Ethics shows that financial services and insurance is the third most trusted profession compared to other services (health care and education being numbers one and two respectively). At the bottom of the list is, unsurprisingly, the federal government.

Demographics play an important role. The report shows that individuals with a lower level of trust in financial services tend to have similar demographic characteristics. While low-trust consumers tend to use fewer financial products and have lower household incomes and assets, they also are more likely to have no loans or debt. This suggests their low trust may lead to avoidance—another hurdle the financial services industry must overcome.

Consumers are also a bit overwhelmed at what is being thrown at them. Information and choices makes it hard to know where to turn.

• 60% prefer products that are easy to use and understand
• 47% believe it’s better to have a relationship with only one or two financial institutions
• 32% comparison shop for financial services and look for the best deal
• 30% are unsure if they are getting honest advice, and
• 26% tend to feel overwhelmed when dealing with finances

From a financial service provider’s point of view trust is key. Eighty-four percent of consumers value transparency, 81% value good customer service and 64% value community involvement.

Interestingly, data security is a big issue for consumers. Eighty-seven percent want a company that keeps information private, 86% want their company to protect them from fraud, 85% want their company to resolve issues quickly and 85% want be notified quickly about transactions.

When it comes to access, low-trust consumers need in-person access more than high-trust consumers, who only really consider it depending on the financial product or amount of money held by the institution.

The most highly rated institutions are community banks and credit unions who are tied at 68/100. The next on the list are investment brokerage firms at 64, national banks at 63, advisory firms at 63, online only banks at 60 and finally investment app companies at 58. The numbers are calculated by asking consumers to rate how much they agree with each statement on a 7-point scale (where 1 means “Strongly Disagree” and 7 means “Strongly Agree”). Consumers are only asked to rate the types of financial companies they use or are familiar with. The agreement ratings were then converted to a 0-100 scale and averaged to form the index value.

Overall, consumers require simple solutions and explanations to their questions. Consumer preference for simplicity and ease of use is so strong (60% of consumers identify it as a priority for them) that it often outweighs fees associated with a product or service (58%), the level of risk (57%), or guarantees offered by the company (50%). Because of this, firms offering simpler, streamlined products that help consumers consolidate their relationships can prevent them from feeling overwhelmed and uncertain about the advice they receive.