While economic challenges underscore importance of financial advice, many banks are missing the mark where it matters most
As a result of the pressure of rising family spending and record levels of personal debt, 59% of retail bank customers in Canada are now considered to be in poor financial health. However, financial institutions may be failing to deliver the support they need.
According to the J.D. Power 2022 Canada Retail Banking Advice Satisfaction Study, 50% of banking clients want their financial institutions to help them better their financial situation.
"The role financial institutions play as trusted sources of guidance and financial advice cannot be overstated, particularly in a challenging economic environment like the one we’re in now," said Jennifer White, senior director for banking and payments intelligence at J.D. Power.
White added that, “Despite the growing importance of financial advice, however, many banks are missing the mark by under-delivering when it matters most. Key performance indicators, such as providing an in-depth review of customers’ financial situations or providing tips to help customers stay on budget, are met less than 50% of the time."
The study found customer satisfaction climbs 229 points (on a scale of 1,000) when clients receive advice or assistance that, in their opinion, fully satisfies their requirements; targeted, individualized financial advice is what generates these improvements. The survey found banks manage to meet all of a customer’s needs 53% of the time, and 72% of customers who get advice from their banks act on it.
The majority of bank customers who participated in the survey do not feel financially secure. Only 47% of bank customers who have gotten guidance fit under the category of having a sound financial situation.
And while half (50%) of retail bank customers say they want their financial institutions to help them improve their financial health, this expectation is not always met.
Retail bank customers want counsel and direction going forward. Customers are 75% more satisfied overall when they can recollect two or more instances of receiving advice from an institution. Fifty-six per cent of bank customers surveyed by J.D. Power said they could remember at least two instances of advice, compared to 61% a year ago.
But a one-size-fits-all strategy won't work. Advice and direction must be tailored to the individual consumer and given to the appropriate person at the appropriate time.
