If financial companies' customers are feeling wary, they've got plenty of reasons after a dismal 2022 for the stock market and this year's stunning failure of four major banks.
Who can consumers and investors trust in this environment? Investor's Business Daily's Most Trusted Financial Companies special report aims to help them decide, based on IBD's fourth annual survey of the companies' own customers.
Consumers can see in this report how financial firms measure up to customer expectations on safety, service and quality products. And how those firms measure up against each other.
Our 2023 list of the 30 Most Trusted Financial Companies draws on a survey in which thousands of people rated financial companies on the trust attributes most important to consumers. Our sister company, MarketWatch, is co-branding the report for a second year.
Financial Companies' Soundness Is Critical
The collapse this year of Silicon Valley Bank, First Republic Bank and Signature Bank — plus Switzerland's Credit Suisse — was a sinkhole. Customer deposits may have been guaranteed by the FDIC, but the failures triggered a banking crisis that spun out across financial sectors in the U.S. and overseas.
While the worst bank-related pain was felt from March to May, aftershocks continue. Just last month, Moody's slashed credit ratings for several small and midsize U.S. banks. The agency warned it may downgrade larger lenders as questions about profitability arise.
For IBD's list of the Most Trusted Financial Companies in 2023, we asked 7,597 survey participants about how they judged the financial soundness of the financial companies they do business with. We also added online banks to our survey this year.
The survey was conducted from May to July by IBD's polling partner, TechnoMetrica Market Intelligence.
There were again eight categories of companies in this year's survey: wealth managers, banks, credit cards, ETF/fund companies, online brokers, plus auto, home and life insurers.
This year we saw how — under the shadows of inflation, a bear market and even the 2008 financial crisis — customer trust in the financial companies they partner with rose in importance. Our survey respondents told us how much they value the best products and services, and that a company's customer service and ethics earn their trust. Other qualities were important to them, too.
Our survey covered seven areas of trust. The attributes for the 2023 IBD Most Trusted Financial Companies survey were financial soundness, quality of products and services, ethical business practices, privacy and security, customer service, prices, and sensitivity to customer needs.
Quality Service Key To Financial Companies' Success
This year we asked about a new attribute — financially sound/secure — in the first phase of the survey, conducted in May. The purpose of that phase is to identify the trust characteristics, or attributes, that are most important to consumers.
Read Our Category Stories On The 2023 Most Trusted Financial Companies In Investing, Insurance, Credit Cards And Banking
Financially sound/secure received the highest weight (20.1%) in our study, topping our list of the most critical trust factors for a financial company. Quality of products/services took the second spot, followed by the commitment to protecting the privacy and security of personal data.
More than 90% of the survey respondents said trust was "very important" in their relationships with financial firms.
The second phase of the survey was conducted in June and July. Using the seven trust attributes arrived at in Phase 1, respondents evaluated the company they most often utilize in each of the eight business lines. (See details of our 2023 methodology.)
Fidelity Scores A Hat Trick
Privately held Fidelity Investments earned the highest marks in IBD's 2023 Most Trusted Financial Companies survey. The Boston-based firm scored a trust trifecta, earning the No. 1 rating in all three investment categories: ETF/fund companies, online brokers, and wealth management. Fidelity also earned the No. 1 overall slot in Investor's Business Daily's trust index.
Rival Charles Schwab also ranked highly in all three investment categories and garnered four of the top-10 spots on the trust index.
"Customers benefit from Fidelity's decades of strength and stability," said Rich Compson, head of wealth at Fidelity Investments.
One survey respondent and longtime Fidelity customer is Chris Bergman, a 62-year-old semiretired media and marketing consultant. He's been with Fidelity since 2017. Asked what makes him trust Fidelity and feel comfortable investing his money with them, he said, "Reputation and history. They've been doing this long enough that big warts would show."
Banks Battle For Customer Trust
Among the categories of financial companies, banks overall found themselves at the bottom of the list in terms of average trust ratings for a third consecutive year. But in the banking category, Schwab Bank topped the list by ranking No. 1 in six of the seven category attributes.
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"One of our guiding principles is that trust is everything and earned over a lifetime and is lost in an instant," said Rick Wurster, president of Charles Schwab & Co., in an interview with IBD contributor Adam Shell.
"As I think about our business, trust really is everything. We're holding our clients' life savings at our firm. They need to be able to know that we're going to take care of that money, that we're going to have their best interests in mind and that their assets are safe and secure. So, we would not be in business without trust and relationships," Wurster said.
Charles Schwab Bank was the fifth-most-trusted financial institution in the U.S. across all eight business categories in the survey.
Customer Trust: Ranking Changes in 2023
Joining Fidelity and Schwab at the top of this year's rankings, USAA (auto and home insurance) and American Funds/Capital Group (ETF/fund companies) rounded out the top 10 on the list.
We grew our respondent pool for the Most Trusted Financial Companies in 2023. In Phase 2, 1,576 respondents came from the IBD website or email invitations, and 2,041 were from the WSJ Opinion Leaders Panel. An additional 3,980 came from TechnoMetrica's network of panel partners.
Financial services firms have faced both internal and external challenges garnering the trust of their customers. Those that focus on the attributes in the 2023 IBD Most Trusted Financial Companies survey, especially financial soundness and quality products, should be recognized for their successes. (Read all our 2023 Most Trusted Financial Companies content.)
