A rocky economy and increasing inflation have sown dissatisfaction among consumers who want more personalized service from banks and financial advisors, prompting them to search for options that offer more security and guidance.
- Consumers expect personalized service and sound financial planning advice.
- Less than a quarter of banking customers have received financial advice or guidance in the last year.
- Just over half of wealth management clients received helpful advice.
- The drop in satisfaction has prompted consumers to find more personalized service in wealth management and banking.
Consumer financial health declined nine points in the past year, and just 21% of bank customers reported receiving any advice or guidance during the past year. according to a survey from J.D. Power.
Financial advisors aren’t faring any better: full-service investment advisors’ rates plunging 17 points. Only 56% of full-service wealth management clients with financial plans say they are receiving comprehensive advice from their advisor.
Younger Investors Shop Around
Generation Z and Millennials are most likely to switch companies in the next 12 months and are most likely already working with a secondary investment firm. About 27% of younger investors say they will or probably will change advisors, while 49% say they’re already working with secondary investment firms.
“This points to a systemic problem in our industry: advisor value propositions grounded in investment performance,” said Tom Rieman, head of wealth solutions at J.D. Power. “Advisors cannot control the ebbs and flows of the market, but the good ones help their clients plan for their best futures and deliver value in the form of comprehensive advice that should shine through in all market conditions.”
In the banking industry, an average of 30% of primary bank customers have shifted more than one-third of their deposits to secondary banks in search of higher interest rates.
“It’s an incredibly tenuous time for both bank customers and financial institutions, and the need for trust between these two parties has never been more pronounced,” said Jennifer White, senior director of banking and payments intelligence at J.D. Power. “Although our study was conducted prior to the recent high-profile bank crisis, the difficult economic conditions that contributed to the Silicon Valley Bank and Signature Bank failures have been building for quite some time.”
Customers are looking to feel as if their money is safe and secure, especially as tough economic times seem to be ahead, she said.
Consumers Expect More
The J.D. Power study ranked U.S. Bank (USB) first for the third consecutive year, Chase (JPM) second and Wintrust Community Bank placing third place for the second year in a row. Consumers lost faith in smaller banks in the wake of the Silicon Valley Bank collapse, opting to move money to larger banks that offer more security.
Investors are looking for better options as well. According to J.D. Power, Charles Schwab (SCHW) won the ranking for wealth advisors but still struggled at the start of the banking turmoil. UBS (UBS) ranked second, and Fidelity ranked third, which could be due in part to its recent offering of crypto trading for investors.