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

THE LONG ROAD BACK Trust in U.S. Financial Services 2011

Trust in U.S. Financial Services Methodology

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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

For Nearly Half of Individual Investors, Trust in Financial 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 has

decreased? 3

Only Half of Individual Investors Trust Financial Institutions in General, Community/Regional Banks and Mutual Fund Companies Fare Best

Trust in Financial Institutions (Top 4 Box, 6-9)

32%

35%

37%

42%

43%

45%

49%

55%

67%

Private Equity Firms

Investment Banks

Property/Casualty Insurance Companies

Life Insurance Companies

Brokerage Firms

Large, National Banks

Financial Institutions in General

Mutual Fund Companies

Community or Regional Banks

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 financial

institutions 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 A

GREAT DEAL” (Trust = 6-9)

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7%

6%

Entry-Level Affluents are More Trusting of Large, National Banks and Brokerage Firms

Trust in Financial Institutions (Top 4 Box, 6-9)

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 financial

institutions 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 A

GREAT DEAL” (Trust = 6-9)

5

33%

39%

31%

43%

49%

52%

51%

59%

62%

32%

35%

37%

42%

43%

45%

49%

55%

67%

Private Equity Firms

Investment Banks

Property/Casualty Insurance Companies

Life Insurance Companies

Brokerage Firms

Large, National Banks

Financial Institutions in General

Mutual Fund Companies

Community or Regional Banks

Individual Investors

Entry-Level Affluents

Half of Individual Investors Need Help Managing Their Money, But Six in 10 are Uncertain of the Value of Large Financial Services Firms

Q. 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 expertise

Q. 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

50% need expert/professional help

to manage money

60% uncertain about value of large firms

Importance vs.

Performance

7

Individual Investors Value Honest Communication and Open and Transparent Business Practices

Importance of Factors to Overall REPUTATION (Top 2 Box, 8-9)

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

5%

19%

20%

49%

49%

51%

54%

62%

69%

74%

75%

75%

84%

91%

Social networking connections

Physical locations

Mobile/Handheld connections

Frequent communication

Highly-regarded local advisors

Informative website

Top leadership

Website with easy financial transactions

Values loyal customers

Available customer service

Consistent product delivery

Fair and competitive prices

Has open and transparent business practices

Honest communicationHigh Importance

24%

21%

Individual Investors Feel That Financial Services Firms Fall Short on What is Important to Overall Reputation

Importance and Performance Ratings (Top 2 Box, 8-9)

Q. 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

91%

84%

75% 75% 74%

69%

62%

54%51%

49% 49%

20% 19%

5%

67%63%

56% 57%59%

56%53%

36%

43%

36%40%

19% 19%

5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%H

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Hig

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Mobile

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Physic

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Socia

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Importance Performance

Brokers, Advisors, Agents and Bankers are Seen as the Most Credible Sources of Financial Information

Credible Sources of Information

Q. 29 The most credible source for information from a financial services firm comes from…?

10

Six in 10 Individual Investors use National News Sources Most Regularly

Sources of Financial Information

Q. 21 What sources of information do you use most regularly to get information about investments, investing, insurance or the financial markets?

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More than Half of Individual Investors Share Information at Least Monthly

Q. 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

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Men Share Information About Financial Services Companies More Frequently than Women

Frequency of Information Sharing

Q. 27 How often do you share information or opinions with others about financial services companies you read or hear about?

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Regulation

Over Half of All Individual Investors Feel More Regulation is Necessary

Beliefs about Regulation

Q. 67 Should financial institutions be regulated more or less than they are currently regulated or is the current amount of regulation sufficient?

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Two Out of Three Believe there are Problems Not Covered in Dodd-Frank and that Entities Should Work Together to Address Problems

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?

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Yes67%

Decreased18%,

Don't know15%

Which entity do you think

should be MOST responsible

for addressing the problems

facing the financial services

industry?

Percentage

Government regulatory

agencies such as the SEC or

Federal Reserve

21%

Financial services companies 6%

Congress 3%

All of the above entities should

work together

65%

Other 3%

Don’t Know 2%

Are there problems beyond those

addressed in Dodd-Frank?

Insights

Financial services firms are suffering from

an enormous trust deficit

More than half of Individual Investors share

information and opinions about financial

services companies at least monthly

Transparency and honest communications

drive corporate reputation

Your client-facing professionals are your

most credible brand ambassadors

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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

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