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Trust in Financial Institutions and Professionals
MacroMonitor Marketing Report
April 2003
Vol. VI, No. 2
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Or, How I Learned to Stop Worrying about the Markets
and Love My Broker
In the past several years, consumers have increasingly become more experienced
and sophisticated in handling their personal finances, particularly with regard to
investing. The combination of their increased involvement in the financial markets and
the financial upheavals that they have experienced unfortunately also translates into
less trust in many financial institutions and intermediaries.
In 1994, well before the market run-up of the late 1990s, the
MacroMonitor questionnaire contained two series of questions that asked household
financial decision makers how much they trust financial institutions and their intermediaries.
In 2002, well after the market peaks of March 2000, we asked the same series
of questions using the same methodology. The highlights resulting from
this comparative analysis of the 1994 and 2002 household-survey responses include
the following:
- Consumers continue to regard depository institutions as the most trustworthy, although that level of trust has declined during this eight-year period.
- The proportion of household financial decision makers who say that they
trust insurance and mutual-fund companies a great deal increased significantly.
- No changes occurred in the level of positive trust for full-service and
discount brokerages (less than 10% of U.S. households), but the percentage of
households that hardly trust them has gone up.
- The level of trust in financial institutions does not coincide with that of
household trust in specific financial intermediaries. The proportion of households that
trust full-service brokers, discount brokers, or mutual-fund company advisors
has increased from 1994 to 2002, as has the proportion that trusts certified
financial planners or independent financial planners.
- The significant decline in "don't know" responses indicates that more
households have an expressed opinion of the trustworthiness of financial institutions
and intermediaries.
HOUSEHOLD TRUST IN FINANCIAL INSTITUTIONS
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