Shocking price increases, rising interest rates and painful drops in the equity and bond markets set the backdrop to this year's Most Trusted Financial Companies special report, based on Investor's Business Daily's third annual survey.
In this environment, customer trust in the financial companies they partner with couldn't be more important. Top-notch products and services and company ethics build trust, but other qualities are important too.
What a difference from a year ago. In the first half of 2021, the S&P rose 14.4%. But the first half of 2022 wiped out all those gains and then some, as the S&P fell 20.6%.
It was "the worst first half for any year since 1970," said Juan Carlos Arancibia, IBD's markets editor. The Nasdaq fell 29.5%, "which was its worst first half ever," he said.
Not surprisingly, consumers have been reeling and this year's results are a mixed bag. USAA and Vanguard once again have taken the No. 1 and No. 2 slot, respectively, on the overall Top 25 trusted financial companies list. And both stalwarts again topped two categories apiece.
The Most Trusted Financial Companies list is based on a June/July survey in which thousands of people rated their financial service providers on the trust attributes that consumers said were most important to them. Our sister company, MarketWatch, is co-branding the report this year.
Customers ranked USAA No. 1 in trust among auto insurers and home insurers. USAA sells insurance to current and former U.S. military members, their spouses and children. Vanguard customers ranked it No. 1 in trust for ETF/fund companies and online brokers.
Andrew Kadjeski, Vanguard's head of retail brokerage and education savings, told IBD that earning and maintaining clients' trust is "the core of everything we do."
Customer Trust: Ranking Changes
However, the survey also reflects the sea change in the financial markets. Primerica, which hadn't made it onto our lists before, came in an impressive No. 3 on the overall list. And it took the top honors for customer trust in the life insurance category.
Plus, JPMorgan Chase and AllianceBernstein made their first appearances on our Top 25 list for most trusted financial companies. Alliance/Bernstein came in No. 6 on the overall list, and third in ETF/fund companies. JPMorgan is 10th on the overall list.
Read Our Category Stories On The 2022 Most Trusted Financial Companies
In Investing, Insurance, Credit Cards And Banking
We also saw changes in the top three rankings in seven of our eight business categories, which include auto and home insurance, life insurance, online brokers, ETF/fund companies, wealth managers, credit card issuers and banks. The only category with the same top-three companies as last year is online brokers. Vanguard topped the list of most trusted online brokers again, but Fidelity edged out Charles Schwab for the No. 2 slot this year.
ETF/fund companies, online brokers and auto insurers are the most trusted by consumers this year. Home insurers, life insurance companies and credit card companies scored in the middle, followed by wealth managers. Bankers are still out of favor with their customers and were ranked as the least trusted.
No banking companies made the top 25 Most Trusted Financial Companies list this year, ditto for last year. Capital One is the highest ranked banker on the overall list, but it's way down at No. 34 on the overall list (Wells Fargo is at No. 24 but that's for its ETF/fund business).
Wider Survey, More Attributes
What accounts for the changes we saw in customer trust rankings? Certainly the tough economic conditions experienced by consumers this year played a role. The IBD/TIPP Economic Optimism Index, a national, monthly consumer confidence poll, declined to a reading of 38.1 in early August, down 1.0% from July. A reading below 50 indicates pessimism. The index has now been in negative territory for the last 12 months.
Another factor: More companies were considered for the list. That's a good thing.
In 2022, 85 companies qualified for the survey analysis. Except for the wealth management and the ETF/fund categories, in which we required at least 100 respondents, we needed at least 125 respondents to include a company in our rankings. Last year, 74 companies made the cut.
We ranked companies on seven attributes this year versus five last year. In Phase 1 of the survey, conducted in June and July by IBD's polling partner TechnoMetrica Market Intelligence, we asked 691 consumers to rank 12 trust attributes. The attributes that were rated statistically important were used to create an overall trust rating (see our 2022 methodology story).
Once again, quality of products, company ethics, protecting customer privacy, treatment of customers and fair prices ranked one through five as the top trust attributes, according to financial companies' customers.
Build Trust: Understand Customer Needs
Two new attributes made the 2022 cut as significant to customer trust: sensitivity to customer needs in the current economic and financial climate (inflation, stock market, etc.) and innovation of processes and offerings.
Clearly, customers want to know that their financial partners understand their economic pain. And they expect the companies they do business with to lead in innovative features and products.
We broadened our respondent pool this year, as well. In Phase 2, the survey had 6,520 respondents, just a little below last year's total of 6,578 respondents. But in 2022, we surveyed IBD subscribers, the Wall Street Journal's Opinion Leaders Panel (WSJ is a sister company to IBD under our parent Dow Jones) and our polling partner TechnoMetrica's consumer network. Last year, all the poll responses came from IBD subscribers and TechnoMetrica's consumer network.
Did these changes impact this year's rankings? Perhaps a little.
However, winning customer trust is a tough and never-ending effort. And companies who have been praised by their customers during this year's economic challenges, should be recognized and lauded. (All our 2022 Most Trusted Financial Companies content can be found here.)
Follow Kathleen Doler, IBD's Special Reports Editor, on Twitter @kathleendoler
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