Financial Check-Ups

Matt, the Credit Union Warrior, asks a great question:

We all have annual health screenings. Why don’t we put a similar level of importance on our financial health?”

You might be tempted to think it’s because of cost. After all, if you’ve got health insurance, the out-of-pocket cost for your annual check-up is minimal, and who knows how much a financial check-up might cost.

My take:
Cost isn’t the big hurdle — it’s trust. Or more accurately, the lack thereof. There are three components of this mistrust: objectivity, credibility, and disclosure.

Even if the financial check-up was free, many consumers would shun the service because they don’t trust financial firms to provide them with an objective view of their financial situation.

When I go to my doctor for my annual exam, I get an honest assessment of my health, and perhaps some recommendations to lose weight or get my good cholesterol number up. What I don’t get is a set of recommendations to buy a whole bunch of services that coincides with what he offers.

But this is exactly what many consumers fear will happen if their bank (and yes, even credit union) does a financial check-up for them — they’ll be hit with unwarranted cross-sell offers. [Now why in the world would they think that ?]

If this weren’t enough, there’s a second component: Credibility.

My doctor has his credentials plastered all over his wall. Very impressive. Who at the bank or credit union is providing this annual check-up for me? What are his/her credentials for doing so? By far, the most common complaint about financial firms coming from the CFO of Shevlin LLP (that would be Mrs. Shevlin — I’m just the limited partner) is “I know more than they do.” And the Mrs. is not a certified financial planner.

And finally, if you could convince customers that the check-up will be objective and provided by credible employees, you would still have to deal with the disclosure aspect. Today’s Gen Yers aren’t as hung up about this as us Boomers and Seniors are, but we don’t like to tell any one firm about our total holdings. Sorry, ain’t gonna give you that info — don’t trust you with it. And without it, you can’t really provide a solid analysis of my financial life.

Don’t get me wrong, Matt — I think the annual financial check-up is a great idea. So was account aggregation. That didn’t catch on either, and for some of the same reasons.

And I’m sure that if banks and credit unions offered this service, they’d get some takers — credit unions in particular. But my bet is that these takers would be those who are already good, loyal customers of those firms. Nothing wrong with that — but this isn’t going to be the killer app that drives new customer/ member growth or significant growth in deposits, loans, or assets.

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