Three out of ten American households feel obliged to do business with one or more financial services companies they distrust. The proportion of customers who distrust their current provider varies by category, with only 12% of customers indicating they distrust their bank, compared to 24% of all homeowners who distrust their mortgage lender.
A recent Market Strategies International study, as a frame of reference, 61% of Americans indicate they generally distrust the federal government.
For the personal insurance industry, the very product is a promise—to help restore your car or home in the event of an accident or loss. Since the average American household only files an auto insurance claim once every seven years—and a homeowner’s claim once every 10-15 years—many have never had the experience of filing a claim with their current insurer. So while the level of trust consumers feel toward their personal insurance providers may be stronger than that for a mortgage lender, the insurance industry has reason to be concerned at the proportion of policyholders who distrust that their carrier will live up to its promises.
Customers who don’t trust their service providers represent a significant risk to the profitability of those businesses. Survey results reveal the overwhelming majority of distrusters are significantly more likely to dissuade friends and colleagues from doing business with a company they use. This is critical because personal recommendations are one of the most trusted information sources cited by consumers when shopping for a new bank, insurer or investment firm.
When it comes to trust, we see significant variation by age. On average, consumers over age 55 tend to be more trusting of their financial services providers than customers under age 35. For a financial services firm, correctly identifying those customers who lack trust in their brand or service representatives can often be challenging. For instance, it’s not accurate to say all Millennials are distrusting. Indeed, the data show that 69 percent of Millennials say they trust all of their financial services providers.
However, a number of factors can influence a customer’s level of trust; among these are service consistency and quality. Customer-perceived service failures are often likely to seed distrust, such as a mortgage servicer’s year-end escrow statement, which often causes client confusion, or an auto insurance company that never communicates with its clients except to send a bill or renewal notice.
In addition to financial service products, Market Strategies also explored trust levels among consumers for numerous services outside of the financial category (healthcare, electric utility, religious institutions, courts, police, federal government, neighbors and strangers) to provide a broad perspective on trust among American households in companies, individuals and institutions they deal with every day.
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