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MacroMonitor Market Trends March 2011

MacroMonitor Market Trends is a newsletter from Consumer Financial Decisions that highlights topical news and trends of interest to you and your colleagues. If you would like more information about the topic in the newsletter or would like to discuss other ways that we can assist you in your research and marketing efforts, please contact us.

Uh-Oh! Trust in Financial Providers Has Declined

Since 1994, MacroMonitor has asked about households' trust in financial institutions and intermediaries. To ensure that this measurement is easy for respondents to answer and comparable year to year, we ask about each type of institution and intermediary using a three-point response scale: "Do you trust [insert institution or intermediary type] a great deal, some, or hardly any?" The figure below shows the result when we combine any mention of "trust a great deal" for any type of institution or financial professional.

Figure 1: Trust in Financial Institutions and Professionals

Not surprisingly, the overall level of trust in both financial institutions and intermediaries declined from the mid-1990s to the post-dot-com bust. Trust in institutions remained relatively the same during the "Uh-ohs" (2000–09) but slowly declined for financial professionals. However, in the first postrecession measurement, the proportion of households that trust any financial institution or intermediary "a great deal" has dropped significantly from 2008.

To understand the implications of the change in trust fully, we must look at the trends in the individual types of institutions and intermediaries. Further, we should explore trust trends by demographic groups, life-stage cohorts, and goals and needs, filtered by ranges of investable assets or debt. For example, for households with $250,000 to $1.9 million in financial assets, trust in accountants, CPAs, financial planners, bankers and credit-union officers, insurance agents, full-service and discount stockbrokers, mutual fund representatives, and lawyers has declined between 2008 and 2010. Trust in financial planners shows the smallest decline. However, for households with financial assets of $2 million or more, the proportion that trust financial planners remains the same in 2010 as it did in 2008. Trust in full-service stockbrokers is also statistically the same.

Trust trends demonstrate that all financial providers face a stiff headwind when offering their services.

To learn more about how the MacroMonitor can help you identify and understand better financial households that do represent business opportunities, please contact CFD.