NEW YORK — As Congress calls for additional oversight of federal bailouts for financial services firms, a new study of American consumers shows the public shares congressional distrust of these companies.
A study of 650 U.S. consumers, titled the “Cohn & Wolfe Financial Confidence Survey,” was conducted last week by online global research provider Lightspeed Research in conjunction with strategic public relations firm Cohn & Wolfe. Results of the study show that the public has little trust in financial advisors, insurers and other financial services companies. In fact, when asked to list words to describe financial institutions, “greedy” and “impersonal” were each selected by 32 percent of respondents, “opportunistic” was selected by 26 percent and “distant from me” was chosen by 22 percent. Respondents could select more than one answer.
Meanwhile, positive terms ranked low in the survey:
“Sympathetic” was selected by 3 percent of respondents
“Transparent” was selected by 3 percent
“Ethical” was selected by 5 percent
“Honest” was selected by 10 percent
“Trustworthy” was selected by 13 percent.
Further reflecting their lack of confidence in these companies, 66 percent of respondents said they do not believe the financial services industry will help them to ever regain the wealth they lost during the economic downturn. Only 8 percent said they did expect such help; 27 percent said they didn’t know.
“Public perceptions about the financial services industry are terrible,” said Matt Wolfrom, Executive Vice President of Cohn & Wolfe, which commissioned the survey. “But there is reason for optimism since the survey showed one key reason for the distrust is that these companies have simply not connected with consumers, who feel they need advice and information during these challenging economic times.
Companies that engage with consumers will find their brands rewarded with more loyalty and business.”
The survey found that consumer trust in financial institutions has dropped significantly during the past 18 months. Fully 67 percent of respondents said they had trust in the industry 18 months ago, but four in 10 of respondents said their trust had weakened.
The shift may explain why 59 percent of respondents said they would welcome increased regulation of banks and other financial institutions; 18 percent they would “greatly welcome” additional regulation.
The single bright spot in the survey was retail banks, which 59 percent of consumers said they “trust the most,” possibly a function of the fact that bank deposits are insured.
But even there, consumers said banks should take steps to restore consumer trust. Asked to select two measures that would help, 52 percent of respondents said banks should “stop excessive bonus pay outs to staff,” 44 percent said banks should show “greater willingness to pass on cuts in interest rates,” and 26 percent said banks should embrace “greater transparency in how they operate and communicate.”