The financial advice industry has a credibility problem: relatively few American consumers trust it. That creates a challenge for advisors and wealth managers who have long made trustworthiness a pillar of their brands as they seek to gain more clients and assets, according to a new survey by Morning Consult, a data research company.
Advisors, along with wealth and investment managers and the firms they work for, garner the least trust of all financial institutions, from banks to insurers, the survey found. The data-heavy
That lack of faith gives investment and wealth management firms the top ranking among other financial services companies that consumers distrust. People trust banks and credit unions (61%), insurers (51%) and payments providers such as Visa, PayPal and MasterCard (48%) more than they do advisors, who fall under the study’s investments and wealth management category. Visa topped the 12-company list of most-trusted financial services brands, followed by PayPal, MasterCard and StateFarm.
The toehold that payments providers have on the survey’s list of most trusted financial services brands “should be a wake-up call to all financial services providers, but mostly for banks and investment or wealth management advisors who have built their brand on creating in-person relationships and strong connections with local communities,” the report says, adding that the findings were “surprising.”
The profile of a consumer who tends not to trust financial institutions doesn’t break down easily by gender, ethnicity, income or age, the study finds. The clear message is that all financial services companies should “assume every customers’ trust must be earned, not given.”
What drives trust, now and going forward?
The survey finds that an investment or wealth manager’s functional and emotional qualities matter far more than her social or experiential qualities. For example, consumers care far more about how their money is managed (72% said they would stop working with a manager or firm if they mismanaged their funds) than they do about a manager’s commitment to environmental or social causes (only an average 34% said a lack of ESG investments would cause them to switch advisors).
“The most trusted financial services providers don’t talk about community as much; they talk about reliability and protection of data,” study author Charlotte Principato, the senior director of financial services analysis at Morning Consult, says in an interview.
The focus on functionality, not social issues, comes as the financial services industry pivots away from in-person relationships to digital-first products and services. People trust Credit Karma, a fintech with no face-to-face connection with consumers, more than they do financial advisors, who have largely grounded their business in building personal relationships with consumers, the survey shows.
“Brick and mortar institutions that traditionally built trust through in-person, face-to-face relationships may be at a disadvantage,” the study says. “A brand doesn’t need a personal relationship with a consumer to engender trust.”
Going forward, “the future of trust will reside more in never breaking it through data stewardship, security and reliability than [ in ] working hard to build it through personal relationships,” the report says. Financial companies should focus on “moving more undecided individuals to a place of trust in financial institutions, rather than trying to convince consumers who inherently don’t trust financial institutions to change their mind.”
