Global Consumers Preparing for Continued Economic Uncertainty; Taking Greater Control of Personal Finances

ARLINGTON, Va., Aug. 17, 2011 /PRNewswire/ -- Consumers are taking greater control of their finances in an effort to ready their households for continued economic uncertainty, according to the latest Consumer Financial Monitor™ released today by Corporate Executive Board (CEB) (NYSE: EXBD).  The survey, which included 18,500 consumers across 24 countries, surfaced increasingly negative feelings about savings and personal income levels that may be attributable to strains on budgets as food and fuel prices rise and remain high.  

Consumers are making significant moves to lower their debt and place more income into savings.  Sixteen percent of consumers (a three percent increase over Q1 2011) paid down debt sooner than expected and almost 25 percent of consumers placed more of their income into savings over the past year versus 21 percent in Q1 2011.  While these gains and use of management tools are positive signs, 43 percent of consumers said they increased their debt or relied on savings to pay bills, a slight increase quarter over quarter.    

Despite an increased focus on financial readiness, consumer confidence in financial providers' ability to keep their commitments and promises, and offer clear and simple fees sunk.  In Q2 2011, 48 percent of consumers expressed low confidence that institutions could keep their promises as compared to 46 percent in Q1 2011 and 55 percent believed financial institutions lack simple pricing fees and policies (vs. 52 percent in Q1 2011).

"While in many markets consumers proactively increased their financial management activity, confidence in providers decreased indicating that institutions are still missing the mark when it comes to helping customers manage their finances," said Peter Aykens, managing director at CEB.  "Re-instilling consumer confidence is critical to the growth of the financial services industry.  Executives need to create a sense of urgency inside their organizations and begin connecting with customers in meaningful ways to stave off this wave of negative consumer sentiment."

The Global Economics of Consumer Sentiment

While confidence in providers dipped lower quarter over quarter, there was little variation among consumers in developed markets versus emerging markets.  Emerging markets, however, showed strong growth in proactive financial management especially in Latin America, where consumer management increased five percent over Q1 2011 to 28 percent.  In the Middle East and South Africa, management activity increased to 38 percent (a four percent increase over Q1 2011).

Disparities between developed and emerging markets did surface at the regional level.  While negative sentiment about providers in North America and EMEA decreased, Latin American, Europe and Asia Pacific consumer sentiment dropped four percent to 23 percent in Asia, 45 percent in Europe and 48 percent in Latin America.  This lower provider confidence was likely driven by austerity measures and sovereign debt concerns.  It is probable that this trend will spread to North American and EMEA in the near term based on stock market swings, unemployment headlines and government budget debates.  

Guidance for Financial Institutions

Based on the Consumer Financial Monitor and its more than 25 years providing best practices to financial services organizations, CEB recommends that institutions work to better support customers' financial goals.  

• Be Supportive:   By understanding the financial goals of your customer and helping them proactively manage their finances, institutions can increase positive sentiment and potentially increase a customer's services portfolio.
• Be Transparent:  More than 50 percent of global consumers feel institutions don't offer clear pricing and fee structures.  By detailing the value of products and services, consumers will have a clear understanding of what they are getting for their money and will not have inflated expectations.  

Methodology

CEB's Consumer Financial Monitor tracks the trends in sentiment and behavior of 18,500 financial consumers across 24 countries on a quarterly basis.  Sentiment metrics include: personal feelings about finances, satisfaction with products, and confidence in providers.   Behaviors tracked include: financial management, shifts in savings and debt, and product purchase.  Together, findings help the marketplace measure, understand, and forecast demand for financial services across geographies and segments.

About Corporate Executive Board

By identifying and building on the proven best practices of the world's best companies, Corporate Executive Board (CEB) helps senior executives and their teams drive corporate performance. CEB offers comprehensive data analysis, research and advisory services that align to executive leadership roles and key recurring decisions.  CEB tools, insights, and analysis empower member companies to focus efforts, move quickly, and address emerging and enduring business challenges with confidence. CEB's client and member network includes 85 percent of the Fortune 500, 50 percent of the Dow Jones Asian Titans, and 70 percent of the FTSE 100.   It spans more than 50 countries, 5,300 individual organizations, and 225,000 business professionals. For more information, visit www.executiveboard.com.

SOURCE Corporate Executive Board