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What the Doctor Ordered: A Prescription for Delivering Effective Financial Responsiveness

October 18, 2018
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A sample of mission statements from banks and credit unions – describing what they are doing today, what their reason is for existing – would reveal some consistent themes. You’d see phrases like “committed to improving the quality of life of the communities we serve,” “helping customers succeed financially” or “delivering superior returns for our employees, customers and shareholders.”

Despite these themes that show an entire industry dedicated to improving consumers’ financial health, staggering numbers of consumers are still unable to cover a financial emergency and are unprepared for retirement. Political and economic influences aside, shouldn’t financial institutions commit to helping consumers achieve financial independence?

As I try to diagnose the factors that might be keeping the financial industry from improving consumers’ financial well-being, I’m reminded of a public health campaign. The Agency for Healthcare Research and Quality launched a $20 million Questions Are the Answer campaign seven years ago, urging patients to ask questions of physicians during their care. The goal of the campaign was to improve patients’ satisfaction and overall experience. The success of the campaign has been debated because of barriers between patients’ perspectives and physicians’ perspectives. These barriers also apply to the financial industry and are worth examining.

Barriers From the Patient or Customer Perspective
A viewpoint article published in the Journal of the American Medical Association (JAMA) in 2013 describes a phenomenon called “white-coat silence” as a patient’s reluctance to ask questions of physicians. This reluctance could be due to factors such as feelings of anxiety, intimidation and vulnerability.

Consider customers of financial institutions. What might be stopping them from asking their financial services representatives questions about their finances? A recent Raddon study, Financial Literacy: Prosperity Begins With Knowledge, found that consumers are overconfident in their financial literacy. While nearly half of surveyed consumers consider themselves extremely or very financially literate, fewer than half received a passing grade (C or higher) on a wide-ranging financial literacy quiz included in the study.

Additionally, 51 percent of consumers feel understanding financial concepts and financial products is required only on a need-to-know basis. Therefore, they are interested in learning about a particular concept only if they need a related financial product.

There is clearly a barrier here. Institutions can hardly answer questions if customers are not asking questions and lack the desire to further understand financial concepts outside their immediate needs.

Even if institutions could encourage consumers to proactively inquire about their financial health, another barrier exists: language. In the medical field, patients may not be able to fully understand the jargon in answers they receive. That same situation arises in financial services, where consumers often do not understand acronyms or concepts that we find commonplace. When customers become silent after receiving a response to a financial question, employees could easily interpret the silence as understanding; however, customers may be too embarrassed to admit they do not understand.

Prescription for Overcoming Customer Barriers
The financial industry cannot underestimate the power of financial literacy programs. The research shows their effectiveness in improving customers’ financial well-being. When consumers become more financially literate, they tend to exhibit more financial discipline in budgeting and tracking interest rates.

The Raddon study on financial literacy reveals that consumers overwhelmingly prefer their primary financial institution as their trusted resource for financial education. When developing a literacy program, consider having a curriculum that is flexible in the type of information you offer. Because consumers have such varying beliefs in the degree of information they need to know, you can offer simple or complex messaging. Diversify the channels you use to deliver your financial education materials. Raddon found that in-person venues are the most common and popular format, so leverage your branch offices as well as online and mobile channels.

Barriers From the Physician or Employee Perspective

To deliver superior returns to customers, financial institutions need to examine internal barriers. JAMA’s 2013 article explores barriers physicians face in being able to fully support patients asking questions. Their main barriers are time and education, which equate to those at financial institutions.

Precious time is required to have meaningful dialogue around health, both physical and financial. Busy branches are less likely to commit to thorough conversations with customers, ensuring they comprehend the financial language.

When you encourage consumers to ask questions about finances, ensure that your employees are comfortable answering those questions, especially if the topics are outside their specialty areas. Even doctors become anxious when asked questions beyond their expertise and might feel that their competence is challenged. How would your tellers feel if they were pressed to list options to diversify a retirement portfolio?

According to the Raddon Employee ViewPoint Survey, less than half of financial institutions’ employees are confident that they know how to best address questions about products and services. In institutions that are considered prime performers, barely 50 percent of employees have that confidence level. The gap in confidence is even greater between employees of the average financial institution and those of prime performers who are asked to match a product to a customer’s need. It is clear that the majority of financial institution employees are not confident that they can help customers figure out the best solution.

Prescription for Overcoming Employee Barriers

To overcome internal barriers at financial institutions, we must explore workflows for busy branches that help transition customers from teller lines to financial services representatives in a timely and customer-friendly manner. Financial institutions should encourage a culture of financial literacy that keeps the dialogue open and ensures customer comprehension.

Ultimately, financial institutions must invest in their employees. Frontline employees and managers require in-depth and ongoing training on product, sales and management support. They then become more comfortable talking about financial education with customers. Even better, they are more engaged with the organization. This engagement leads to overall success for the financial institution.

Financial institutions exist to help customers succeed financially. When they manage financial literacy programs effectively and invest in training employees efficiently, they can break down the barriers to improving consumers’ financial health. The virtuous cycle can continue, just as the doctor ordered.