If left to their own devices, individuals are prone to making biased financial decisions. These biases are particularly significant as the financial marketplace grows increasingly complex. In light of this complexity, financial advisors and counselors could play an important role by potentially connecting consumers with low-cost products and services and by helping them make better decisions.
Yet, the use of financial advice remains low, particularly among low-income households. Research estimates that 40% of those making less than $25,000 a year receive any kind of financial advice (compared to over 70% of high-income households).
Previous research has found that trust is critical both for seeking financial advice but also implementing the advice. Increasing trust could lead to a greater uptake of beneficial products, and it may also help counselors make more personalized recommendations as participants share more details about their financial circumstances.
We have partnered with Navicore Solutions, a credit counseling agency, to explore ways in which we could use language cues to increase trust in credit counselors.
Behavioral Diagnosis and Key Insights
Our partnership began by conducting site visits to Navicore’s headquarters, where we listened to credit counseling calls. We also spoke with credit counselors and Navicore staff members about why it is difﬁcult for people to trust counselors. We conducted interviews with individuals who recently went through a credit counseling session.
Finally, we conducted a quantitative analysis of administrative data provided by Navicore.
The diagnosis yielded a number of key insights into the barriers to trusting the ﬁnancial counselor.
a) Callers tend to prioritize their initial interactions with the counselor, thus making the beginning of the counseling session very important to building
b) Callers’ trust in credit counseling broadly depends on two components: their perceptions of the counselor’s expertise and the counselor’s
Based on these ﬁndings we conducted two experiments to help increase trust in Navicore’s ﬁnancial counselors.
Experiment 1: Conveying Expertise and Empathy with Feel, Felt, Found Statements
In our ﬁrst experiment, we trained credit counselors to use a “Feel, Felt,
Found” (FFF) statement.
The FFF statement was designed to increase trust by incorporating an empathy statement (“I know how you feel”) and by using social norms to signal expertise (“I’ve worked with a lot of clients and they found this successful”).
We measured trust in three ways:
1. We asked every caller to take a post-session Previous research suggests that if counselors increase trust, callers are more likely to do small favors for them.
2. We used administrative data to track information provision among completed sessions. If counselors increase trust, the caller is more likely to share personal information.
3. Lastly, we measured the percent of callers who completed the counseling session.
Callers were randomly assigned to one of two groups of counselors. The ﬁrst group was trained to use FFF statements, while the second group went about the session as usual.
The counselors in each group were randomly selected and balanced to ensure equal experience. In total, 1,026 members were included in the experiment, with 623 in the treatment group receiving the FFF statement, and 403 in the control group with no change from standard counseling practices.
Figure 2: Sample FFF Statement
Experiment 1: Results
We found that there is evidence to suggest that using an FFF statement did increase trust. We saw a signiﬁcant difference in the percentages of clients who started the survey.
We also noticed a signiﬁcant increase in information disclosure among callers. We believe this led to better counseling
sessions for 623 members, as the credit counselors had more accurate information to work with.
However, these trends were moderated by caller demographics, as the FFL statement was less effective for Hispanic and Latino callers.
We also believe the increased trust will result in a greater chance of success on a debt management plan– with greater trust in the counselor, the members are more likely to follow recommendations and engage at future points with Navicore.
However, the potential increase in trust did not translate into a higher conversion rate, suggesting that either there is a ceiling effect around 70% or that there are more important barriers preventing callers from ﬁnishing a session.
Figure 2: Results by Condition
Experiment 2: Redesigning the Counseling Introduction with a Verbal Contract
Because initial interactions are important, we aimed to redesign the introduction to the credit counseling session in our second experiment. The original introduction prioritized collecting caller information, asking clients about their objective ﬁnancial circumstances, and reading credit counseling disclosures.
One group of counselors continues the introduction as it is. Two other groups offer a redesigned introduction that differs in two ways. In the ﬁrst group, counselors ask callers about how their ﬁnancial circumstances are causing them stress rather than collecting information about objective ﬁnancial circumstances. This helps counselors connect with callers on an emotional level.
In the second group counselors also ask about ﬁnancial stress. In addition to that, they offer a verbal contract. Research has demonstrated that contracts serve an important purpose when intrinsic trust is difﬁcult to build. In the new introduction, the informal contract helps clients feel they will be treated with honesty and respect. The contract also incorporates elements of reciprocity by detailing what clients are expected to do in return.
Figure 3: Sample Experiment Statement
Experiment 2: Results
We found that there was some evidence to suggest that the re-designed introduction did increase trust. While fewer individuals opened the post-session survey, that difference was not statistically signiﬁcant. Furthermore, callers with the new introduction were signiﬁcantly more likely to share personal information. As with the Feel, Felt, Felt statement, we believe this led to better counseling sessions for 234 callers.
The verbal contract, on the other hand, appears to have hurt trust. Signiﬁcantly fewer people started the online survey and were willing to share personal information. While contracts can promote cooperation during interactions when intrinsic trust is difﬁcult to build, they have been shown to reduce interpersonal trust.
Alternatively, using the verbal contract may have made the counselors feel more uncomfortable, which translated into lower levels of trust. We hypothesized that while the verbal contract would likely be less effective in terms of trust-building, it may be more effective in terms of session conversion.
This was not the case, as neither the re-designed introduction nor the use of a verbal contract had a meaningful effect on call conversion.
Figure 4: Results by Condition
Our experiments suggest that trust is context speciﬁc – whom we trust and how much we trust them is partly shaped by small factors in our environment. Financial counselors and advisors should be aware of these factors – even small changes in how they interact with clients can signiﬁcantly shape their relationship. For organizations offering these services, our experiments suggest that the conﬁdence of frontline staff may impact trust. Efforts to improve customer satisfaction and engagement should ensure frontline staff feel comfortable and conﬁdent with any new initiative.
However, our experiments suggest that, within the context of ﬁnancial counseling, trust does not limit a caller’s willingness to ﬁnish a counseling session as we hypothesized. Instead, other factors –such as logistical factors at the time they are calling and how tenuous their ﬁnancial situation is – seem to play more important roles. This is not to say that trust is not important. Rather, the effects of trust are likely diffuse and harder to measure with respect to this speciﬁc metric.