KING OF PRUSSIA, PA – June 16, 2022 – According to new research from The American College of Financial Services, one in three consumers have high trust in financial services, with healthcare (42%) and education (37%) as the only service industries scoring higher. The research reveals opportunities for financial companies to better connect with and grow trust with consumers by understanding their beliefs and behaviors as these insights can help companies to close gaps in trust and better position themselves for long-term relationships.
“Our Center promotes ethical behavior by offering research and programs that go beyond the rules of market conduct to help individuals and companies be more sensitive to ethical issues and think more critically about solutions for the benefit of society,” said Azish Filabi, executive director of the Center for Ethics in Financial Services and associate professor of ethics at The American College of Financial Services. “We want to be known as the go-to resource on trust, and this research supports our mission to raise the level of ethical behavior in the financial services industry.”
Simplicity and Ease of Use – Not Knowledge – Wins the Day for Consumers
The study found three in five (60%) consumers prefer products and services that are easy to understand and use. In fact, consumers’ preference for simplicity outweighed other factors when deciding to use a financial company, including fees associated with the product/services (58%), the level of risk (57%) or guarantees offered by the company (50%).
Consumers want financial professionals who are upfront, one of the top ten reasons to trust a financial company. A somewhat counterintuitive insight: while the general belief is that consumers are seeking knowledge and skills in a financial professional, they seek simplicity first and foremost. It takes knowledge and skill to simplify complex ideas, yet, from the consumer’s perspective, it’s possible that complexity signals distrust while simplicity – if it’s transparent and truthful – can be an attractive proposition.
More Trusting of Companies Whose Values Align with Their Own, but Consumers are Willing to Make Tradeoffs
Nearly seven in 10 (67%) consumers cited “a company’s values are aligned with mine” as a reason for trusting. Understanding consumers’ values can help financial companies connect with and build trust with consumers.
There is a spectrum of values that influence consumers using a given company (honesty/transparency, customer service, community involvement, treatment of employees, contributions to social justice and diversity as well as practical considerations and fair treatment for all people). Yet consumers must often balance practical considerations with their values when choosing which companies to use, and are willing to make tradeoffs due to:
Lack of choice
“Consumers are cognizant of tradeoffs they must make between ‘practical considerations’ and a company’s alignment with their values,” said Domarina Oshana, PhD, Director of Research and Operations at The American College Center for Ethics in Financial Services. “Sometimes short-term budgetary constraints or maintaining longer-term financial goals take precedence. Much like the scenario that plays out with utility companies, it can be difficult for some consumers to completely steer clear of companies that don’t align with their values, as they may not be able to find the product or service otherwise. Yet, one deal breaker for consumers seems to be instances where they see a company treating people unfairly.”
Demographics of Trust Index Reveals Opportunities for Trust Building
The financial industry continues to think about how to manage the changing landscape of U.S. demographics. Companies can stand out as trustworthy by better understanding the unique groups they serve. According to the Demographics of Trust Index:
As household income increases, so does trust in all service industries
Millennials have the highest levels of trust in all types of financial companies (and higher levels of trust across all service industries compared to other generations)
Gen-Z and Boomers+ consumers have lower trust than others in many types of financial companies
Consumers of color have higher levels of trust in national banks, online-only banks, and investment app companies compared to White consumers, but similar levels of trust in financial services overall
Female consumers have similar levels of trust as male consumers
Overall, consumers with low trust in financial services tend to be both older and younger (Gen-Z and Boomers+), female, and less educated and have lower household incomes
Low trust consumers tend to trust local institutions
The research methodology for the study included a consumer survey as well as focus groups and in-depth interviews to assess consumer perceptions of trust. Respondents for the consumer survey were asked a number of questions about their beliefs and behaviors to measure trust in financial services. Information for the consumer survey was gathered through an online panel, designed and deployed by an external research partner to The College, with over 1,500 Americans conducted between May 12-June 2, 2021. To qualify for participation in the study, respondents had to be aged 18 and older and live in the US. Two focus groups and five in-depth interviews of consumers aged 18 and older in the U.S. were also conducted to dive deeper into the themes uncovered in the survey and provide context for the quantitative data from the survey.
The Demographics of Trust Index™ was derived from the consumer survey to track and trend demographics of trust in financial services over time. It is a reliable and valid composite measure summarizing multiple statements in the survey that represent beliefs about trust on privacy and data security, financial integrity, guidance/decision-making, community support, and innovation. Consumers were asked to rate how much they agree with each statement on a 7-point scale (where a 1 means “Strongly Disagree” and a 7 means “Strongly Agree”). Consumers were 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.