A key factor when choosing a bank: Good financial advice


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There’s one key factor you might have overlooked when you opened your last checking or savings account: Does the bank offer good financial advice?

Consumers tend to focus on a few factors when they choose a new bank, says Paul McAdam, senior director of the banking practice at J.D. Power: convenience, product offerings and reputation.

A recent Bankrate survey revealed similar findings. Besides the bank’s track record and access to branch or ATM locations, one in four respondents said they selected the institution providing their primary checking account based on a recommendation from a friend or family member.

Perhaps the quality of financial guidance and advice an institution can provide should be something you consider before beginning a relationship with a new bank or credit union. As with any other relationship you agree to commit to, you should be asking yourself: What’s in it for me?

Banking advice is best

Just 28 percent of retail banking customers remember receiving some form of financial advice from their bank within the past 12 months, according to J.D. Power’s 2018 U.S. Retail Banking Advice Study. But 78 percent of respondents say they would like their bank to offer guidance.

Among customers who say their retail bank has dished out financial advice, a whopping 89 percent say they think they’ve benefitted from it.

“We have seen that customers who receive advice from their banks are more satisfied,” McAdam says. “They’re receiving information that’s valuable and that will help them in their personal finances.”

In the new study, which surveyed more than 3,800 customers and looked at satisfaction with advice offered by 17 big retail banks, the top five types of advice consumers want from their banks include:

  • Quick tips that improve their financial circumstances (41 percent)
  • Investment-related advice (39 percent)
  • Retirement-related advice (35 percent)
  • Household budgeting advice that helps with tracking expenses (33 percent)
  • Tips related to saving for a large purchase (29 percent)

How to judge your bank

Using a 1,000-point scale, J.D. Power ranked large banks based on how satisfied customers are with their advice. Chase came out on top, followed by Regions Bank, M&T Bank and Bank of America.

J.D. Power 2018 U.S. Retail Banking Advice Study graph

If you visit the home page on Chase’s website, you’ll see articles and videos—real content  McAdam says. There’s guidance for customers, whether they’re taking on a mortgage and buying a new house or need help keeping their monthly spending in check.

“We work incredibly hard to make sure our customers are meeting their financial goals at every stage in life, from basic every day savings to long-term retirement,” says Thasunda Duckett, CEO of Chase’s Consumer Bank. “We’re honored to be recognized for this work and will continue to innovate for our customers as their advice needs evolve.”

Assessing the advice you’re given

Even if you have access to advice and financial tools, you may not necessarily use it. In the past 12 months, a very small portion of consumers in the mass market report using an online robo-advisor service (1.78 percent) or personal financial management service for budgeting, spending or saving (4.83 percent), according to J.D. Power.

But if receiving advice matters to you—and along with comparing CD rates and fees it’s going to help you decide where to bank—it’s helpful to understand what good financial advice looks like.

A good first step is taking a look at the bank website, McAdam says. Some institutions simply talk about their products instead of offering helpful advice and support.

As you’re comparing banks and doing your research, consider how well the bank can answer your questions about its products, features and fees.

“If you don’t feel like you’re getting a really clear explanation of these things, either through the website, at the branch on the phone, then it’s probably a really good indication that this is maybe a bank that’s going to be much more transactionally-oriented rather than one that will be focused on providing advice and guidance,” McAdam explains.

Good advice meets you where you are from a physical standpoint and is tailored based on the stage of life you’re in, says Kendra Thompson, managing director and North American wealth management lead at Accenture.

While banks are innovating and introducing more digital tools, a virtual experience can’t replace what humans can offer. Among investors looking for wealth management advice, for example, there’s a preference for hybrid models that combine advice from digital platforms and real people.

“The idea of scaling advice to digital channels is not binary. It’s not robo versus human,” Thompson says. “Validation, confirmation, support — these things will not go away. It doesn’t matter how rich the digital experiences get. There is a need for those things and most people want those things delivered through a human.”