The Long Road Back: 2011 Edelman Trust in U.S. Financial Services Survey

THE LONG ROAD BACKTrust in U.S. Financial Services2011

Trust in U.S. Financial Services Methodology Individual Investors • Income: $50,000 or more. (An income of $50K+ represents the top 50% of all U.S. Households according to the U.S. Census Bureau, Current Population Reports, P60- 235 published August 2008) • Investments: $10,000 or more invested in liquid assets and/or mutual funds, stocks and bonds, and more than just a 401(k) or Roth/traditional IRA • Telephone survey among 503 “Individual Investors” • Survey dates: November 9-24, 2010 • Sampling error margin: ± 4.37% at the 95% level of confidence Entry-Level Affluents • Subgroup constitutes the top 18% of the Individual Investor population • Income: $150,000 or more • Investments: $100,000 or more 2

For Nearly Half of Individual Investors, Trust inFinancial Services Declines Decreases in trust are due primarily to the perception that financial services companies have acted in a greedy manner (57%) and that the industry itself has made the problems worse (18%).Q. 11 Compared to last year, has your trust in the financial services industry…?Q. 12 (Reduced sample, Q11. „Decreased‟) What is the most important reason your trust in the financial services industry hasdecreased? 3

Only Half of Individual Investors Trust FinancialInstitutions in General, Community/Regional Banksand Mutual Fund Companies Fare Best Trust in Financial Institutions (Top 4 Box, 6-9) Community or Regional Banks 67% Mutual Fund Companies 55% Financial Institutions in General 49% Large, National Banks 45% Brokerage Firms 43% Life Insurance Companies 42% Property/Casualty Insurance Companies 37% Investment Banks 35% Private Equity Firms 32%Q. 58-66 Now I would like to focus on your trust in different financial institutions. Please tell me how much you TRUST businesses in each of the following financialinstitutions to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM AGREAT DEAL” (Trust = 6-9) 4

Entry-Level Affluents are More Trusting of Large,National Banks and Brokerage Firms Trust in Financial Institutions (Top 4 Box, 6-9) 67% Community or Regional Banks 62% 55% Mutual Fund Companies 59% 49% Financial Institutions in General 51% 45% Large, National Banks 52% 7% 43% Brokerage Firms 49% 6% 42% Life Insurance Companies 43% Property/Casualty Insurance 37% Companies 31% 35% Investment Banks Individual Investors 39% 32% Entry-Level Affluents Private Equity Firms 33%Q. 58-66 Now I would like to focus on your trust in different financial institutions. Please tell me how much you TRUST businesses in each of the following financialinstitutions to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM AGREAT DEAL” (Trust = 6-9) 5

Half of Individual Investors Need Help ManagingTheir Money, But Six in 10 are Uncertain of theValue of Large Financial Services Firms 50% need expert/professional help to manage money 60% uncertain about value of large firmsQ. 10 I believe that my family and I need expert and professional help to manage our money more effectively. Assuming I can find a firm that I trust and respect, I believe it would be helpful to me to have expert and professional money management help and expertiseQ. 9 The recession has left me less certain about the value that large financial services firms offer my family and me in managing our money 6

Importance vs. Performance 7

Individual Investors Value Honest Communicationand Open and Transparent Business Practices Importance of Factors to Overall REPUTATION (Top 2 Box, 8-9) High Importance Honest communication 91% Has open and transparent business practices 84% Fair and competitive prices 75% Consistent product delivery 75% Available customer service 74% Values loyal customers 69% Website with easy financial transactions 62% Top leadership 54% Informative website 51% Highly-regarded local advisors 49% Frequent communication 49% Mobile/Handheld connections 20% Physical locations 19% Social networking connections 5%Q. 30-43 How important are each of the following factors to the overall reputation of a financial company? Please use a nine-point scale where one means that factor is“not at all important” and nine means it is “extremely important” to overall reputation (Top 2 Box, 8-9) 8

Individual Investors Feel That Financial Services FirmsFall Short on What is Important to Overall Reputation Importance and Performance Ratings (Top 2 Box, 8-9) 100% 91% 90% 84% 80% 24% 75% 75% Importance Performance 21% 74% 69% 70% 67% 63% 62% 59% 60% 56% 57% 56% 53% 54% 51% 49% 49% 50% 43% 40% 40% 36% 36% 30% 20%19% 19%19% 20% 10% 5% 5% 0% Available customer service Top leadership Frequent communication Honest communication Values loyal customers Highly-regarded local Mobile/Handheld Physical locations Has open & transparent Social networking Consistent product delivery Fair and competitive prices Informative website Website with easy financial connections business practices connections advisors transactionsQ. 30- 43 “How important is this factor to overall reputation on a 9-point scale where one means “not at all important” and nine means “extremely important”? (Top Two Box, 8-9)Q. 44- 57 “How well has the financial services industry performed on this factor to overall reputation on a 9-point scale where one means “not at all well” and nine means“extremely well”? (Top Two Box, 8-9) 9

Brokers, Advisors, Agents and Bankers are Seen asthe Most Credible Sources of Financial Information Credible Sources of InformationQ. 29 The most credible source for information from a financial services firm comes from…? 10

Six in 10 Individual Investors use National NewsSources Most Regularly Sources of Financial InformationQ. 21 What sources of information do you use most regularly to get information about investments, investing, insurance or the financial markets? 11

More than Half of Individual Investors ShareInformation at Least MonthlyQ. 27 How often do you share information or opinions with others about financial services companies you read or hear about?Q. 28 How do you share that information about financial services companies and products? Indicate all that apply 12

Men Share Information About Financial ServicesCompanies More Frequently than Women Frequency of Information SharingQ. 27 How often do you share information or opinions with others about financial services companies you read or hear about? 13

Regulation

Over Half of All Individual Investors Feel MoreRegulation is Necessary Beliefs about RegulationQ. 67 Should financial institutions be regulated more or less than they are currently regulated or is the current amount of regulation sufficient? 15

Two Out of Three Believe there are ProblemsNot Covered in Dodd-Frank and that EntitiesShould Work Together to Address Problems Are there problems beyond those Which entity do you think Percentage should be MOST responsible addressed in Dodd-Frank? for addressing the problems facing the financial services industry? Government regulatory agencies such as the SEC or 21% Federal Reserve Dont know Yes Financial services companies 6% 15% 67% Congress 3% Decreased 18%, All of the above entities should 65% work together Other 3% Don’t Know 2%Q. 68 Do you believe there are problems in the financial services industry that need to be addressed beyond what was addressed in Dodd-Frank?Q. 69 (Reduced sample, Q68 „Yes‟) Which entity do you think should be MOST responsible for addressing the problems facing the financial services industry? 16

Financial services firms are suffering from an enormous trust deficit Transparency and honest communications drive corporate reputationInsights Your client-facing professionals are your most credible brand ambassadors More than half of Individual Investors share information and opinions about financial services companies at least monthly 17

Steps on the Road Back to Trust • Evaluate your materials through the lens of the customer • Don’t try to do it alone • Ensure that everyone, from CEO to CSRs, reinforces your company’s values • Use all the channels and trusted sources in the communications mix • Harness the power of search • Social media plays an important role 18

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The Long Road Back: 2011 Edelman Trust in U.S. Financial Services Survey

by Edelman Digital on Mar 10, 2011

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