Navigating Financial Uncertainty: Whose Advice Do Americans Trust?
As economic uncertainty intensifies, consumers are grappling with a range of financial challenges, from inflation to stagnant incomes. In response, many are seeking financial advice and planning tools to navigate these turbulent times.
Americans are turning to various sources for this guidance. Some are typical, such as traditional financial institutions (FIs), and some are novel, such as social media and artificial intelligence (AI). With more individuals seeking help, understanding where they find information is key to grasping the shifting landscape of financial decision-making.
- Consumers Want Help Managing Their Finances
- People Get Financial Advice Wherever They Can Find It
- Traditional FIs Remain Consumers’ Most Trusted Source of Financial Advice
- Attract and Retain Customers With Personalized Financial Expertise
Consumers Want Help Managing Their Finances
Rising inflation and stagnant or falling incomes are driving demand for financial advice. These economic headwinds have many Americans actively seeking financial planning support.
Consumers are anxious about their economic prospects.
A recent PYMNTS Intelligence survey finds that nearly two-thirds of consumers live paycheck to paycheck. Plus, almost one-quarter of them do so while struggling to pay their bills. Seventy-two percent of these paycheck-to-paycheck individuals say their income has not offset inflation.
57%
of consumers sought financial advice in 2023.
Additionally, 61% of Americans who do not expect their finances to improve this year cite inflation as a key reason. Nearly one-third attribute their situation to stagnant or declining incomes.
In the face of these concerns, people want help managing their finances.
These financial challenges are prompting consumers to look for advice. Last year, 57% of individuals in the United States sought help with financial management.
Moreover, nearly three-quarters (72%) of those who have never received financial planning guidance are open to such counsel. Among them, 52% plan to find this kind of advice in the next three years.
People Get Financial Advice Wherever They Can Find It
Individuals are seeking financial advice from a wide range of sources. Many are turning to friends, family and social media, with Gen Z and millennials relying heavily on these sources. Now AI is gaining traction too, especially among younger generations.
31%
of investors are comfortable using financial advice from AI without double-checking it with a different source.
Individuals are looking for financial counsel from their social networks.
The most common sources that people turn to for this kind of guidance are the people in their lives. Nearly half (47%) of those who sought financial advice last year looked to their friends and family. This share is greater than those who said the same of any other source. That share rises to 58% among Gen Z and 55% among millennials.
Social media is influencing how consumers make monetary decisions, but many are skeptical.
Forty-two percent of Americans turn to these platforms for financial advice. However, less than one-quarter believe social media has made investing easier, while nearly two-thirds say it has had no impact. Compared to advice from professionals or from friends and family, Americans are less likely to trust social media.
In recent years, AI has become a key source for financial advice.
Thirty-seven percent of Americans utilize AI for financial guidance, with this figure jumping to 61% among Gen Z. Common uses include education on personal finances, creating budgets and informing investment strategies. In fact, 31% of investors are comfortable implementing financial advice from generative AI without checking it against another source.
Traditional FIs Remain Consumers’ Most Trusted Source of Financial Advice
Even as new technologies empower people to seek financial information on their own, consumers still trust traditional systems above all. They continue to rely on established FIs as the experts.
People have more confidence in advice from banks than in that from friends and family.
This holds true across most generations. Seventy percent of baby boomers trust banking institutions’ financial advice, while only 60% trust friends and family. Gen X trusts banks more too, at 73% versus 69%. For Gen Z, these shares are 72.3% and 71.6% — a small gap, but FIs still come out ahead. Only millennials trust banks slightly less than friends and family, at 73% versus 76%.
61%
of Americans would seek help from a financial adviser if they received a windfall.
Individuals trust the pros to help them manage large sums of money.
Seventy-two percent of Americans would not trust themselves to manage a financial windfall on their own. Sixty-one percent would turn to a financial adviser in such an event. Seventy-six percent of Americans give professionals’ advice an A/B grade, while only 35% would rate their friends’ advice as highly.
Personalization is key to FIs’ ability to meet consumer demand for financial expertise.
Consumers want their banks to tailor advice to their individual needs. In fact, customer satisfaction with retail banking advice jumps 195 points (on a 1,000-point scale) when the guidance is personalized. This kind of individualization is increasingly becoming the norm. Sixty-three percent of retail bank customers said they had received personalized content.
Attract and Retain Customers With Personalized Financial Expertise
In today’s challenging economic landscape, FIs have a critical opportunity to deepen client relationships by offering personalized financial advice. To effectively expand their customer base and enhance retention, banks should focus on satisfying the increasing demand for financial guidance. The opportunity is ripe as economic uncertainty drives more consumers to seek help.
By tailoring creditable advice to individual needs, FIs can stand out in a crowded field. They are competing not only with other banks and professionals but also with consumers’ social networks and AI tools.
PYMNTS Intelligence offers the following actionable roadmap for FIs seeking to assist their customers in navigating economic challenges:
- Invest in AI-driven personalization. Leverage AI tools to offer personalized financial strategies, increasing customer satisfaction by addressing specific needs and financial goals.
- Enhance trust through expertise. Highlight the trust gap between traditional FIs and other sources, such as friends, family and social media. Reinforcing FIs’ status as trusted advisers can attract and retain clients.
- Target unmet demand for financial planning. With so many individuals who have never received financial guidance now open to it, there is a valuable opportunity to engage them with tailored offerings.
The future of financial guidance lies in blending expert knowledge with cutting-edge technology. By focusing on personalized solutions and making trustworthy advice accessible, banks can strengthen client loyalty and attract new customers.
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