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Defining trust - more work is needed to understand consumer trust

The FMA's report on trust has got journalists writing in all sorts of different directions. The NZ Herald (in an article I quoted in this post) felt it pointed to a lack of trust. Rob Stock, writing at Stuff, on the other hand chose to use the lens of contrast with Australia to highlight the presence of trust. Both articles are based on the same data. How can this be? The problem is a lack of agreement on what trust actually is, and the fact the survey only assessed trust in institutions by people that hold the products. Looking at each issue in turn raises more interesting questions for those of us with a commercial interest in winning trust, retaining trust, and using it as the basis for a mutually beneficial relationship.

Not including people that do not hold financial products creates multiple gaps in the view provided by the research. The first is that we have no idea about whether the people that do not buy these products have a trust issue. A brief thought exercise could see us easily categorise people who have not bought a financial product into those that need to, and those that do not. Trust is irrelevant for those that do not need to buy. For those that have a need, but don't buy, we could then sort between those not capable of buying (because of limited means, or due to being ineligible) and those that are capable. We do not need to examine the issue of trust for those not capable. For those with a need and the capability who have not bought a product trust would be a fascinating issue to explore.

That leads us to consider the definition of trust. Reading the report I was aching to ask the researchers about the definition. More than that, I wanted to know from consumers whether the obstacle to purchasing financial products was the presence of distrust, or the absence of trust, or required trust above a certain level. Without that understanding it is hard to interpret the meaning of the measurements in the report. If the presence of trust is required in order to purchase, then the answers in the 'don't know' category, and the middle section of the five point scale must all count towards the non-trusting balance. If consumers are happy to buy in the absence of distrust, then they could be counted with the total for 'trusting'.

Furthermore, I doubt that trust functions the same for different types of products. This report includes life insurance with investments. As virtually all life insurance is rate-for-age term insurance the proposition is fundamentally different to most investments. Even with the investments categories, the question is asked at a very high level. The category "shares" includes very risky and much less risky propositions. It may be unclear who the financial service provider is in this context.

On balance, there is plenty more work to be done to understand the area of consumer trust. Getting to the point where a benchmark is sufficiently meaningful that it could be tracked year-on-year so that there is a reliable measurement for trust in financial service providers would be a big achievement, and worth spending the time and effort to achieve. It is not achieved the by the current report.

I have asked the FMA to provide a copy of the report by PDF which makes it easier to store, and mark-up, for future reference.


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