KING OF PRUSSIA, PA – June 16, 2022 – According to new research from the American College of Financial Services, one in three consumers have a high level of trust in financial services, with healthcare (42%) and education (37%) being the only service industries to get a higher score. Research reveals opportunities for financial companies to better connect and build trust with consumers by understanding their beliefs and behaviors, as this insight can help companies close trust gaps and better position themselves to long-term relationships.
These findings are part of the inaugural study on trust in financial services conducted by the American College Cary M. Maguire Center for Ethics in Financial Services, the only ethics center within an academic institution focusing exclusively on the financial services sector. The study surveyed more than 1,500 US consumers ages 18 and older, with a nationally representative sample based on age, gender, census region, highest level of education attained and race/ethnicity.
“Our Center promotes ethical behavior by providing research and programs that go beyond rules of market conduct to help individuals and businesses 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 recognized as the go-to resource for trust, and this research supports our mission to raise the bar for ethical behavior in the financial services industry.”
Simplicity and ease of use – not knowledge – wins the day for consumers
The study revealed that three out of five consumers (60%) prefer products and services that are easy to understand and use. In fact, consumers’ preference for simplicity outweighs other factors when deciding to use a financial company, including fees associated with the product/service (58%), level of risk (57% ) or guarantees offered by the company (50%) .
Consumers want finance professionals who are outspoken, one of the top ten reasons to trust a finance company. A somewhat counter-intuitive idea: while the general belief is that consumers seek knowledge and skills from a financial professional, they are above all looking for simplicity. It takes knowledge and skill to simplify complex ideas, but, from a consumer perspective, complexity may signal mistrust while simplicity – if transparent and truthful – can be an attractive proposition.
More trust in companies whose values match theirs, but consumers are willing to compromise
Nearly seven in 10 consumers (67%) cited “a company’s values are aligned with mine” as a reason for trust. Understanding consumer values can help financial firms connect with consumers and build trust with them.
There are a range of values that influence consumers using a given business (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) . Yet consumers often must balance practical considerations with their values when choosing which companies to use, and are willing to compromise due to:
- Lack of choice
“Consumers are aware of the trade-offs they must make between ‘practical considerations’ and aligning a company with their values,” said Domarina Oshana, PhD, director of research and operations at American College. Center for Ethics in Financial Services. “Sometimes short-term budget 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 avoid companies that don’t align with their values because they might not be able to find the product or service. other. Yet a deal breaker for consumers seems to be when they see a company treating people unfairly.
Demographic Trust Index Reveals Opportunities to Build Trust
The financial industry continues to think about how to manage the changing landscape of American demographics. Businesses can stand out as trustworthy by better understanding the unique groups they serve. According to the Demographics of Trust Index:
- As household income increases, confidence in all service industries also increases
- Millennials have the highest levels of trust in all types of financial companies (and the highest levels of trust in all service industries compared to other generations)
- Gen-Z and Boomer+ consumers have less 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 in general
- Female consumers have similar levels of confidence to men
- 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
For more information on the results of the Trust in Financial Services Study, visit https://insights.theamericancollege.edu/ethic-trust-study-2022/.
The study’s research methodology included a consumer survey as well as focus groups and in-depth interviews to assess consumer perceptions of trust. Respondents to the consumer survey were asked a number of questions about their beliefs and behaviors in order to measure trust in financial services. Information for the consumer survey was collected through an online panel, designed and deployed by a research partner external to the College, with over 1,500 Americans conducted between May 12 and June 2, 2021 To be eligible to participate in the study, respondents had to be 18 years of age or older and living in the United States. Two focus groups and five in-depth interviews with consumers ages 18 and older in the United States were also conducted to further explore themes uncovered in the survey and provide context to the quantitative survey data.
The Demographics of Trust Index™ was derived from the consumer survey to track and track demographic trends in trust in financial services over time. It is a reliable and valid composite measure summarizing several statements from the survey that represent beliefs about trust in data privacy and security, financial integrity, orientation/decision making, community support and innovation. Consumers were asked to rate how much they agreed with each statement on a 7-point scale (where 1 means “Strongly disagree” and 7 means “Strongly agree”). Consumers were only asked to rate the types of financial companies they use or know of. The match scores were then converted to a scale of 0 to 100 and averaged to form the index value.