“Client-Facing Professionals” Most Trusted in Industry

The 2nd annual “Trust in U.S. Financial Services” survey from Edelman Public Relations found trust levels are suffering throughout the industry.Forty-six percent of individual investors participating in the survey trusted financial services companies less in 2010 than 2009. Of that substantial percentage, 57% said it is because financial services companies are “acting in a greedy manner” and 18% said the “industry itself has made the problems worse.” For the survey, “Individual Investors” are those with household incomes of at least $50,000 and that have at least $10,000 of investable assets.

“The way people perceive companies has changed significantly since the pre-crisis era, and the reputations of financial services companies in the U.S. have been some of the hardest hit,” said Matthew J. Harrington, CEO, Edelman U.S. “The decline in trust in these institutions – even as the financial markets were recovering – underscores the long road back they must travel to re-earn the lost trust.”

The survey also found that half of the respondents acknowledged needing help managing their money more effectively, but six in 10 are uncertain of the value that large financial services firms can provide in managing their money.

Investors said “honest communication” (91%) and “open and transparent business practices” (84%) are most important to them when considering the merits of a financial services company. Traditional marketing tactics – “fair and competitive prices” (75%), “available customer service” (74%) and “website with easy financial transactions” (62%) – ranked lower, as did “consistent product delivery” (75%).

Moving away from “big, bad banks” 

Edelman found less than half (49%) of respondents trust financial institutions in general. Community or regional banks scored highest in the survey (67%), with mutual fund companies coming in second at 55%. Life insurance companies (42%) and property/casualty insurers (37%) ranked in the middle of the pack, and investment banks (35%) and private equity firms (32%) were least trusted.

One silver lining large financial firms may want to pay attention to - "Entry-Level Affluents" – a sub-set of the survey with an annual income of more than $150,000 and investments of more than $100,000. They have significantly higher trust in both large, national banks (52%) and brokerage firms (49%), than the overall Individual Investor survey population (45% percent and 43% respectively).

Respondents viewed client-facing professionals – brokers, advisers, agents and bankers – as the most credible sources of information (37%) from financial services firms, with portfolio managers seen as the second most credible (15%).    

Fifty-six percent of those surveyed believe that financial institutions need to be regulated more, even after the passage in July 2010 of the Dodd–Frank Wall Street Reform and Consumer Protection Act. Additionally, two out of three respondents believe Dodd-Frank doesn't address some problems, and 65% believe government agencies, financial services companies and Congress must work together to address the problems facing the financial services industry.