Fewer consumers think their financial services providers have their best interests at heart, according to Forrester Research, Inc.’s (Nasdaq: FORR) fifth annual customer advocacy scorecard. Based on a survey of 5,000 US consumers, the rankings evaluated 41 leading US banks, brokerages, and insurers. This year, consumers’ ratings of financial institutions are down across the board, falling to their lowest levels since Forrester began surveying customer advocacy five years ago. Forrester attributes this year’s drop in ratings to a broad decline in consumer confidence due to events like the subprime mortgage crisis. The scorecard was released today at Forrester’s 2008 Financial Services Forum For Marketing And Strategy Professionals in New York.

Customer advocacy is the perception on the part of customers that the firm does what’s best for them, not just the firm’s own bottom line. According to the report, customer advocacy drives real loyalty — a willingness to buy, borrow, save, and invest more with a firm that a consumer already uses.

“The subprime mortgage crisis, sagging stock markets, and falling rates of return on everything from savings accounts to real estate have left consumers feeling less confident about their financial positions and about the firms they use,” said Bill Doyle, vice president and principal analyst at Forrester Research. “Financial companies need to raise the bar on the customer experiences they provide in order to weather this storm and keep customers loyal.”

Although consumer ratings fell for nearly all firms this year, the relative ranking of many firms stayed the same. Highlights from the Forrester report include:

  • USAA retains top spot. USAA customers continue to give their firm the highest ratings, just as they have for each of the past four years. Other customer-owned organizations continue to score well, including credit unions and Vanguard.
  • Property and casualty insurers continue strong showing. Of the top 10 organizations, five are property and casualty companies. Another one of the top 10 is “independent insurance agents.”
  • A.G. Edwards fell farthest among brokerages. Late last year A.G. Edwards was absorbed by Wachovia Securities. Investors who identified themselves as A.G. Edwards customers rated the firm lower than Wachovia Securities customers rated their firm. It was the first time in years that A.G. Edwards ranked lower than Wachovia Securities.
  • AIG and New York Life Insurance dropped the most among life insurers. Life insurers fared worse than property and casualty insurers as sluggish stock markets hurt equity-based policies like annuities.
  • National City Bank tumbled. Only 31 percent of National City’s customers rated the bank high on customer advocacy, compared with 40 percent last year. In the second half of last year, National City emerged as one of the nation’s biggest subprime lenders.

At Forrester’s Financial Services Forum, more than 400 marketing and strategy professionals — spanning organizational roles such as Marketing Leadership professionals, Marketing Research professionals, Customer Experience professionals, eBusiness & Channel Strategy professionals, and Interactive Marketing professionals — have gathered to learn how to deliver great customer experiences. Speakers include industry leaders from Bain & Company, Capital One, Charles Schwab, State Farm, Wachovia, and Wells Fargo. In addition, participants are gaining information on how to provide great customer experiences through one-on-one sessions with Forrester analysts, peer networking, and a technology showcase where 25 sponsors are sharing their solutions, including platinum sponsor Acxiom and gold sponsors Interwoven, LivePerson, and Sapient.

Led by Forrester analysts, the two-day Event features sessions across four role-based tracks, exploring how each role within an organization can affect customer experience. Attendees also have an opportunity to attend a full-day, post-event workshop, “Building The Next-Generation Financial Services Web Site.”

Forrester’s new report, “Customer Advocacy 2008: How US Consumers Rate Their Banks, Brokerages, And Insurers,” is currently available to Forrester RoleView™ clients and can also be purchased directly here.