Three-quarters of Americans believe that complexity and confusion has played a major role in the current financial crisis and 63% feel that financial institutions intentionally make things complicated to hide risks or to keep people in the dark, according to research by Siegel+Gale.
The survey of 1,214 American homeowners and investors reveals that an overwhelming majority of Americans are now demanding more clarity in communications from companies and the government. Fully 84% of all consumers say they are more likely to trust a company that uses jargon-free, plain English in communications than one that does not, and 79% say they think it is “very important” that President Obama mandate that clarity, transparency, and plain English be a requirement of every new law, regulation and policy.
Trust Down Across Board
Because of the economic downturn, trust in companies is predictably down, the survey confirms. Compared with one year ago, 37% of respondents are less likely to trust their mortgage lender; 36% are less likely to trust their broker or financial advisor; and 35% are less likely to trust their bank.
Among the most trusted sources for financial information, financial advisors, accountants and family members still come out on top, while TV personalities, newsletters and magazines have almost no credibility:
Financial Documents Hardest to Understand
The financial crisis also has highlighted the complexity and confusion that consumers have tolerated and accepted with contracts and investments. Consumers admit to rarely reading and often not understanding what they are committing to and attribute density, lack of comprehension, complicated jargon, and length as the primary reasons for not reading the materials.
Specific survey findings:
- Nearly half (48%) of respondents say their mortgage application is most difficult to understand, followed by health insurance explanation of benefits (EOB)? forms, tax returns and investment account statements.
- ?About 50% of consumers find their insurance, credit card and wireless phone contracts extremely or somewhat difficult to understand.
- 65% feel that prospectuses and investment disclosure materials are by far the most difficult financial materials to understand.
- 52% of investors report they “sometimes” or “never” read investment materials.
- 52% “sometimes” or “never” read insurance policies.
- 32% “sometimes” or “never” read credit card applications or wireless phone contracts.
Consumer Attitudes are Shifting
Despite these admissions of past complacency, the survey reveals that the financial crisis has produced a significant shift in consumer attitudes away from blind acceptance of complexity and toward a major groundswell of support for more transparency. Half (50%) of all consumers are now more likely to read prospectuses, disclosures and contracts compared with one year ago.
Making these documents simpler and easier to read would encourage consumers to take more responsibility to understand risks and rewards, and to be more accountable for their decisions, Siegel+Gale said.
“People are desperate for clarity and simplicity in order to make informed decisions,” said Alan Siegel, founder and chairman of Siegel+Gale. “There is a huge opportunity for government and business to overcome cynicism and regain lost trust through the way they communicate with their constituents and customers.”
About the survey: Siegel+Gale conducted an online survey between December 29, 2008 and January 5, 2009. 1,214 US homeowners and investors age 25+ participated in the survey.