Ethics In Financial Services Insights
Drivers of Trust in Consumer Financial Services
The article uses the Center for Ethics’ Trust in Financial Services Study (2021 Consumer Survey) to explore the drivers of trust in consumer financial services. By contextualizing the Center’s research within existing academic research, the study highlights how both corporate reputation and a consumer’s personal values play a critical role in establishing and maintaining trust in the financial services sector.
The Importance of Building Trust
The research, based on responses from nearly 1,700 U.S. consumers, examines trust levels associated with seven types of financial service providers including national banks, credit unions, and online-only financial institutions. One of the key findings is the stark contrast in how trust is built among "familiar non-customers" and "customers." For familiar non-customers – respondents who don’t have a relationship with a firm but are familiar with the services provided – trust tends to be influenced by external indicators such as reviews, third-party recommendations, and the overall reputation of the institution.
This dynamic is especially important for digital-only providers, who are newer to financial services; trust is often built through indirect experiences for such firms. In contrast, for customers who already have established relationships with a provider, trust is more deeply rooted in personal interactions. These customers value shared ethics, protection of their interests, and personalized services, particularly from institutions like credit unions, national banks, and investment firms.
Values Associated with Trust
The study underscores the need for financial institutions to differentiate their trust-building strategies for these two groups. For institutions aiming to attract familiar non-customers, focusing on reputation management and enhancing their public image is critical. By prioritizing transparency, aligning operations with core values, and offering tailored customer experiences, financial service providers can strengthen trust with clients. Conversely, when maintaining existing customer relationships, reinforcing trust through personalized, value-aligned services are key. In addition, these customers consider whether firms are actively protecting their interests.
These findings offer valuable insights for financial institutions looking to navigate the competitive and increasingly digital marketplace. Moreover, the research offers practical guidance for building, maintaining, and repairing trust differentiated by the type of financial entity and the type of customer in the relationship.
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For further details on the research findings, you can access the full report in the Financial Planning Review.
Pattit, J. M., & Pattit, K. G. (2024). An empirical exploration of the drivers of trust in consumer financial services.
Financial Planning Review, e1190.
For more information on the Center’s research on trust's role in financial services, get our full report.
Financial Planning Retirement Planning Tax Planning Insights
2024 Advisory Services Survey
The new 2024 Advisory Services Survey explores key similarities and differences in service offerings and client needs among three types of financial professionals: dually registered advisors (Duals), investment advisor representatives (IARs), and those who are either insurance agents (IAs) or registered representatives (RRs). The results reveal opportunities for independent advisors to differentiate their practices, as well as areas in which captive advisors have clear advantages.
What Services Do Advisors Offer?
The survey began by asking advisors about the services they are currently offering to clients. Across all three advisor types, the data shows independent advisors, both dually registered and IARs, are leading the way in delivering a wide gamut of services to their clients, including: charitable planning, college savings planning, estate planning, retirement planning, risk management, financial planning, and investment management.
“Independent advisors, both dually registered and IARs, are leading the way in delivering a wide gamut of services to their clients.”
However, IARs are less likely to offer special needs planning and both IARs and Duals fall short in offering business planning services – with only 57% of dually registered advisors and a mere 44% of IARs offering such services.
Services Currently Offered
By Advisor Type:
The American College of Financial Services. Advisory Services Survey. 2024.
What Strategies Do Advisors Use?
The data further suggests that independent advisors are leading the way in using various strategies – especially tax-informed planning strategies – to deliver the many services they offer clients. Financial professionals who are dually registered or IARs have a competitive advantage in delivering tax-informed planning strategies to differentiate their practices.
In contrast, insurance agents and registered representatives are often required to comply with the restrictions of their home office in regard to tax planning services. However, our research suggests that over half of these insurance agent and registered representative respondents employ tax-efficient withdrawal strategies (54%) and conduct tax planning around life events with their clients (51%).
Strategies Currently Used
By Advisor Type:
The American College of Financial Services. Advisory Services Survey. 2024.
Unfortunately, with many home offices not offering a comprehensive education on tax planning services, it would seem that the respondents currently utilizing these tax-efficient withdrawal strategies and conducting tax planning related to life events could benefit from some form of formal education to improve their effectiveness and raise overall client satisfaction.
“[Advisors] currently utilizing these tax-efficient withdrawal strategies and conducting tax planning related to life events could benefit from some form of formal education to improve their effectiveness and raise overall client satisfaction.”
What Services Are Not Being Offered?
Finally, the survey asked advisors about the services their clients frequently request – to reveal any gaps in their current offerings. When reviewing this data, one significant outlier emerges. More than 68% of insurance agents and registered representatives, 54% of IARs, and 57% of dually registered advisors reported small business owner tax planning as the most frequently requested service among those they are not currently providing.
This represents a sizable unmet need that could prove to be a differentiator for any advisors willing to add these services to their menu. Yet, without comprehensive education on tax planning services or robust tax planning resources, how can we ensure that financial professionals across the financial services ecosystem do tax planning well?
Strategies Not Used But “Always” or “Often” Requested
Small Business Owner Tax Planning:
The American College of Financial Services. Advisory Services Survey. 2024.
Financial Planning Is Tax Planning
When reviewing the results of this survey in totality, an interesting trend emerges. Many advisors partake in some form of tax-informed financial planning. Independent advisors are more likely to say they engage in tax planning than others – but more than half of all types of advisors are currently employing tax-advantaged strategies. However, across all categories, advisors are not meeting the needs of their clients when it comes to small business tax planning, a valuable service that many advisors could benefit from offering to their clients.
Fortunately, financial advisors can address this gap through a new designation at The College. The Tax Planning Certified Professional™ (TPCP™) program is The College’s latest offering to the financial services industry and addresses this need. As advisors look to implement advanced tax strategies in their own practices, the TPCP™ program can help them by equipping participants with the skills to identify and evaluate these strategies for individuals and small businesses with a focus on maximizing tax benefits while ensuring compliance with current legislation.
The program covers a number of different topics including tax planning during the accumulation phase and the less frequently covered topic of tax planning during retirement (or the decumulation phase).
Enrollment for this powerful new designation launches in November and, with advisors already lining up to be among the first to call themselves a Tax Planning Certified Professional™, the time is perfect to seize this opportunity and join them as you look to grow your practice by improving your ability to meet the needs of your clients.
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About The College Diversity, Equity & Inclusion Podcasts
Where Military and Financial Services Meet
In this special episode of our Shares podcast recorded at The College’s 2024 Military Summit in Philadelphia, PA, host and military veteran Chet Bennets, CFP®, ChFC®, CLU®, RICP®, CLF® speaks with Lacey Langford, AFC®, founder of MILMO® and MilMoneyCon™ and an expert on navigating financial topics within the military community. They discuss the dual issues of how the financial services profession can better serve military members, veterans, and spouses in times of transition, as well as why those transitioning from military service into civilian careers are well-suited for positions in the industry.
Lacey Langford, AFC® is an Air Force veteran, military spouse, speaker, and financial coach who changes people’s lives from being fearful of money to having control and confidence with it. She is an Accredited Financial Counselor® (AFC®) with over 15 years of financial planning, counseling, and coaching experience, and is a member of the advisory board for the American College Center for Military and Veterans Affairs.
Langford is the founder of MILMO®, a community dedicated to helping the U.S. military with personal finance. She is the host of The MILMO® Show, a podcast that helps the military community make, save, and invest money wisely. She is also the founder and CEO of MilMoneyCon™️, a national conference for financial professionals united by military service.
Any views or opinions expressed in this podcast are the hosts’ and guests' own and do not necessarily represent those of The American College of Financial Services.
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About The College Diversity, Equity & Inclusion Insights
2024 Military Summit Highlights
Formerly known as the Clambake, the inaugural Military Summit melded several traditions of The College and its Center for Military and Veterans Affairs, including the Maury Stewart Lecture Series and the Leadership Symposium into a full day of programming spread between the W Hotel Philadelphia and the National Constitution Center. With over 140 financial professionals, service members, veterans, military spouses, and scholars in attendance, it was an inspiring, educational, and empowering event in the best tradition of the Center’s mission: providing educational support and career development opportunities to active duty, guard and reserve members, veterans, and their spouses.
An Examination of Knowledge and Leadership
The Military Summit kicked off with Center managing director Phil Easton, CMSgt, USAF (Ret.), welcoming the attendees and recognizing the solemn nature of the day chosen for the Summit with a moment of silence.
“This event is a celebration of the military community, but it’s also an occasion to remember, as we always do, those who have given their lives in service to their country, both in and out of uniform,” he said.
The annual Maury Stewart Lecture was up next, delivered by Michelle Caruso-Cabrera: a CNBC contributor, former chief international correspondent, and the network’s first Latina anchor. Caruso-Cabrera spoke about her experiences transitioning from a local journalism to the national stage when CNBC was still a young network and many of her colleagues felt she was making a career mistake. She went on, however, to become a major force that drove CNBC’s growth over 15 years, including traveling the world to interview important politicians and leaders – while also unwittingly becoming a leader in the newsroom herself.
“You know leadership when you see it, and you feel it when it’s missing,” she said. “I was surprised some of my colleagues looked at me as a leader because I’d never thought of myself as ‘the boss.’ But you don’t have to be the boss to be a leader. It’s all about little interactions, giving credit where it’s due, and thinking small, not just big.”
“You don’t have to be the boss to be a leader. It’s all about little interactions, giving credit where it’s due, and thinking small, not just big.”
–Michelle Caruso-Cabrera, veteran journalist
The session on leadership was followed by a talk from Jamie Hopkins, Esq., LLM, CFP®, ChFC®, CLU®, RICP® of Bryn Mawr Capital on adaptive retirement planning. Throughout the presentation, Hopkins used data from The College’s 2023 Retirement Income Literacy Study and other sources to drive home the point that retirement plans need to be flexible enough to account for variables in markets and individual lifestyles – there is no one-size-fits-all solution.
“Americans are being told as long as you put money into your 401(k) and save rather than spend, you’re going to be okay. That’s an oversimplification,” he said. “We also have to do a better job guiding clients through the decumulation stage: they’ve spent their entire lives saving, and if they’re afraid to see their balances go down during retirement, it kind of defeats the purpose.”
Technology and Opportunity in Financial Services
Further programming at the Military Summit included a panel discussion on the impact of artificial intelligence (AI) on financial services led by Kevin Crawford of Northwestern Mutual, including College faculty members Chet Bennetts, CFP®, ChFC®, CLU®, RICP®, CLF®, Azish Filabi, JD, MA, and Eric Ludwig, PhD, CFP®. The panelists took the opportunity to note the pitfalls and promise of AI technology; while it has the potential to enhance consumer education and build trust in the industry, when used for nefarious purposes it can also threaten to undermine privacy protections and perpetuate many of the discriminatory practices that have plagued the profession in the past.
“When AI is impacted by faulty data or human biases, it can continue those biases,” Filabi said. “What happens when an insurance company’s AI system uses private data to arbitrarily strip coverage from people it thinks don’t qualify for it? There’s a lot of good it can do, but only if it’s managed ethically and transparently.”
“When AI is impacted by faulty data or human biases, it can continue those biases. There’s a lot of good it can do, but only if it’s managed ethically and transparently.”
–Azish Filabi, JD, MA
Attendees got a sneak preview of the evening’s festivities with a fireside chat featuring College board of trustees member Lieutenant General Michelle Johnson, USAF (Ret.) and 2024 Soldier-Citizen Award recipient Major General Suzanne Vautrinot, USAF (Ret.). The two discussed General Vautrinot’s path through the service, from her early Air Force days to her introduction to cyber operations that eventually led her to help found the military’s Cyber Command in defense of sensitive information worldwide.
Among the many things that make an effective leader, General Vautrinot said, the most important is creating a culture of trust and respect where people feel their ideas are heard and their peers are accountable for their actions.
“In the Air Force, there’s a tradition we call the ‘hot wash,’” she said. “After any kind of operation, before any more discussion happens, the senior officer who was leading the operation will be the first to share their analysis of how it went and what they could have done better as a leader. How you recover from any kind of internal crisis is just as important as how you handle it.”
Finally, attendees were invited to network and socialize in a Military Resource Group Networking Lounge featuring informational booths from event sponsors on resources and partnerships available to military members, veterans, and spouses: these included USAA, NFP, Thrivent, Nationwide, and F&G.
A Patriotic Culmination
After the Military Summit concluded, attendees migrated over to Philadelphia’s National Constitution Center for the main event of the day: the Soldier-Citizen Award and Scholarship Fund Dinner, which raises money for the Center to provide scholarship opportunities to members of the military community who want to transition into the financial services profession and pursue a designation or certification with The College.
Easton read off an impressive list of achievements for the Center in 2024, including:
- 1,700 scholarships granted by the Center since 2014
- 49 master’s degrees and 245 designations awarded to military community members in 2024
- $460,000 in funds raised for 67 scholarships and Center initiatives in 2024
In addition, Easton noted 20% of The College’s military scholarships go to military spouses, and that 19 scholars were in attendance for the evening’s event. Attendees heard from three of them – Tia Nichole McMillen, Kyle Packard, CFP®, ChFC®, and Rachael Smith, MBA – who are now successful professionals in the financial services industry as they shared their stories and thanked the Center and The College for the opportunities they received.
“Successful transition is possible through this powerful, thriving, and supportive community. We here, all of us, have your six,” said McMillen in her remarks, referring to the military phrase meaning “to have someone’s back.”
“Successful transition is possible through this powerful, thriving, and supportive community. We here, all of us, have your six.”
–Tia Nichole McMillen, military scholar
The evening’s crowning moment, of course, was the official presentation of the Soldier-Citizen Award – a bust of Pericles, the Greek soldier, philosopher, and leader – to Major General Vautrinot. In her acceptance speech, she brought the conversation back to the solemn meaning of 9/11, as well as what it means to be a member of the military and serve others. Recalling an incident involving colliding planes years earlier during an air show at a German base, she remembered what happened after everyone present got over their shock.
“In the moments afterward, you didn’t see people running away from the wreck – they ran to help,” she said, asking all the military veterans, service members, and families present to stand and be recognized once again. “That is service: the scholars and signers of the Constitution framed around us remind us of that, and so does everyone in this room. Because of you, we will always move forward together. Thank you.”
Thanks to all who attended the 2024 Military Summit! Check out all of the event's highlights below:
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