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Financial Planning > Behavioral Finance

Forrester: Many Consumers Distrust Financial Firms

By Trevor Thomas

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NU Online News Service, July 18, 2003, 4:41 p.m. EDT – Almost half of U.S. households have been dissatisfied enough with their financial providers to change providers, and more than one-third have dumped financial providers more than once, according to survey results released by Forrester Research Inc., New York.

Forrester researchers asked U.S. adult consumers about attitudes that might affect financial services companies’ ability to win and keep customers.

The researchers found that 67% of U.S. households are investing now, up from 46% in 1998.

The fact that many households got into investing shortly before the investment markets were about to tank has not helped consumer confidence: almost half of the survey participants said they worry about being able to retire securely, and 72% said they don’t feel financially secure.

Although the percentage of households that invest is much higher than it was five years ago, the percentage might now be shrinking. Half of the Forrester survey participants said they are investing less in stocks than they did before the recent wave of corporate scandals hit the news.

Fifty-one percent of the survey participants told researchers that they do not believe that their primary financial provider looks after the customer’s best interest.

Forrester recommends that financial firms attack consumers’ lack of trust by learning more about their customers.

“How can a firm recommend what’s right for a customer if it doesn’t know anything about his life stage, attitudes, and needs?” Forrester asks in a discussion of the survey results.

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