Consumers Lack Confidence in Financial Institutions

A survey by Nielsen found that only 28% of respondents were confident of the company that manages their investment or retirement accounts.

Banks received more confidence than investment firms. Respondents expressed the save level of confidence about their life insurance company as they did about the company that manages their investment or retirement accounts. They expressed more confidence in their checking and savings bank (38% are confident), according to a release about the Nielsen IAG Financial Brand Confidence Study.

The study found that confidence was linked to age and affluence as well as the amount of risk associated with the financial institution. Older adults aged 55 and older as well as those with assets more than $100,000 were more confident than average.

When asked what factors would increase confidence in the safety and soundness of their financial institution, close to half (44%) said reading positive stories in the press would help, according to the survey. One-fourth of respondents said seeing regular advertising for that institution would help. The same number said regularly receiving mail or e-mail also helps. Twenty-one percent said regularly seeing Internet offers and advertising from the institution would help.

In fact, 55% of respondents who said they had seen more advertising from their financial institution reported having “complete confidence” in the financial health and soundness of their financial company. A minority (18%) said they had “little or no confidence” in their company after seeing more advertising.

Nielsen said that even though advertising by financial services and insurance firms went down about 13% from 2007 to 2008, the survey shows the importance of advertising to consumer confidence.

“This research shows that ‘out of sight’ can mean ‘out of business’,’ said Richard Khaleel, EVP of Nielsen IAG’s Financial practice, in the news release. “The current economic climate makes it more important than ever for financial institutions to bolster confidence among their clients and this study clearly demonstrates the link between advertising and confidence levels. With constant scrutiny on the industry it’s clear that taking control of the message in advertising and press can make all the difference for a brand.”

The Nielsen IAG Financial Brand Confidence Study was a national online survey of 5,500 U.S. respondents.