Most Americans believe they pay nothing for their financial products — or have no idea what they pay — according to a new study.
About one-third (31%) say don’t know what they pay for their financial products — and that’s an increase of four percentage points in a single year, according to the study by Hearts & Wallets. Only about a quarter (28%) are certain they are charged a fee by a retail financial “store.” (Hearts & Wallets defines “stores” as retail and defined contribution providers that work directly with investors.) Of the 41% who say they pay their financial store “nothing” and instead pay through actual products, a jaw-dropping 72% say they pay nothing for the product.
The study of more than 5,000 U.S. households found that understanding how a firm earns money is the No. 1 trust driver within the control of a financial services firm, and yet only one out of five consumers has a clear understanding of the incentives of their providers, a figure that has not improved year-to-year. However, among traditional firms, self-service outperforms other categories in customer “understanding how firms earns money.”
In the study, more than 5,000 U.S. households ranked their top 10 “wants” in their financial services providers. At the national level, the three most important attributes are:
About half of investors are highly price-sensitive and want providers to have “low fees” (54%) or at least “fees that are reasonable for the service provided” (53%).
Mass market investors (under $100,000 in investable assets) and Millennials grew more demanding in all dimensions. Retirees became more demanding in access and reliability attributes. High net worth clients ($2 million-plus) are more relaxed, notably on “has Internet account access” and “wide variety of products,” which are becoming must-haves that are no longer competitive differentiators, according to the report.
The study, “Wants & Pricing: What Investors Buy & Competitive Ratings,” analyzes attitudes and behaviors of investor life stages from age 21 through post-retirement and are drawn from the Hearts & Wallets Investor Quant™ (IQ) Database. Results represent a weighted representative cross-section of the U.S. national population based on over 5,000 participants surveyed June 2015.
About one-third (31%) say don’t know what they pay for their financial products — and that’s an increase of four percentage points in a single year, according to the study by Hearts & Wallets. Only about a quarter (28%) are certain they are charged a fee by a retail financial “store.” (Hearts & Wallets defines “stores” as retail and defined contribution providers that work directly with investors.) Of the 41% who say they pay their financial store “nothing” and instead pay through actual products, a jaw-dropping 72% say they pay nothing for the product.
The study of more than 5,000 U.S. households found that understanding how a firm earns money is the No. 1 trust driver within the control of a financial services firm, and yet only one out of five consumers has a clear understanding of the incentives of their providers, a figure that has not improved year-to-year. However, among traditional firms, self-service outperforms other categories in customer “understanding how firms earns money.”
In the study, more than 5,000 U.S. households ranked their top 10 “wants” in their financial services providers. At the national level, the three most important attributes are:
- “fees are clear and understandable” (56%)
- “is unbiased, puts my interests first” (54%)
- “explains things in understandable terms” (54%)
About half of investors are highly price-sensitive and want providers to have “low fees” (54%) or at least “fees that are reasonable for the service provided” (53%).
Mass market investors (under $100,000 in investable assets) and Millennials grew more demanding in all dimensions. Retirees became more demanding in access and reliability attributes. High net worth clients ($2 million-plus) are more relaxed, notably on “has Internet account access” and “wide variety of products,” which are becoming must-haves that are no longer competitive differentiators, according to the report.
The study, “Wants & Pricing: What Investors Buy & Competitive Ratings,” analyzes attitudes and behaviors of investor life stages from age 21 through post-retirement and are drawn from the Hearts & Wallets Investor Quant™ (IQ) Database. Results represent a weighted representative cross-section of the U.S. national population based on over 5,000 participants surveyed June 2015.
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