Research confirms fee transparency key to trust

The majority of Canadians trust their bank to provide them with the right advice and products, according to the J.D. Power 2017 Canadian Banking Sales Practices and Advice Study released on Thursday.

In fact, the J.D. Power study found, 81% of Canadian retail bank customers say they trust their bank to do the right thing, while 75% said they believe their bank acts ethically.

One of the keys to earning client trust is being open and transparent about fees, according to the study. For example, of those customers who said they were surprised by the fees connected to a bank product or service, only 23% said they trusted their bank to do the right thing. On the other hand, 45% of customers who understood and were aware of the fees they paid said they trusted their banks.

“It’s really important to have clear communication and to make sure [representatives are] not glossing over the fees,” said Jim Miller, senior director of retail banking services with J.D. Power in Colorado, in an interview with Investment Executive.

Representatives should ask clients questions about why they might be opening a specific account at the bank, their plans for the account and the balances they intend to keep within the account.

The survey found that, overall, customer satisfaction with a bank increased by 78 index points (on a 1,000-point scale) when representatives asked questions before suggesting clients open a new account.

Customer satisfaction also increased when bank representatives offered financial advice. For example, overall satisfaction scores are 64 index points higher among customers who said they’ve received financial advice from a banking representative.

“[Customer] satisfaction and the likelihood a customer will stay with you and purchase from you again is highest if you’re really focused on providing advice rather than trying to sell,” Miller said.

Indeed, 71% of customers who received financial advice said they followed the representative’s suggestion, while 59% of customers said they had opened a new account as a result of the advice they received from a representative.

The study is based on the responses gathered in June 2017 from 8,792 retail bank customers of Canada’s Big Five banks. The project is meant to measure satisfaction among retail bank customers who have opened a new account in the past year with a bank representative, customers who received financial advice in the past year from a representative and customers who had an account opened without their consent in the past year.

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