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The dark side of trust and the light side of working alliances in financial services
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.ORCID iD: 0000-0003-4394-4020
Uppsala University.
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
2014 (English)In: International Journal of Bank Marketing, ISSN 0265-2323, E-ISSN 1758-5937, Vol. 32, no 3, 245-263 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: The purpose of this paper is to use psychological theory to improve our understanding of financial advice-taking. The paper studies how a working alliance between financial service customers and advisors affects the advisor's assessment of the financial service buyer's perceived risk preferences, and what role trust plays as a mediating variable. Design/methodology/approach: The paper obtained data by means of a questionnaire that was answered by 375 matched pairs of bank advisors and customers. Findings: This paper explains how the working alliance method - a concept from psychotherapeutic theory - between financial service customers and advisors affects the advisor's understanding of the financial service buyer's perceived risk preferences. The paper also finds that the role of trust is perceived differently by the advisor and the customer. Advisors see that as their clients learn to trust them they lose touch with the customer's perceived risk preferences, whereas customers do not perceive that their trust in the advisor has any relationship to their risk preferences. Practical implications: This results suggest that advisors lose touch with the risk preferences of trusting customers, and that psychological methods are needed if the advisor should actually understand customer perceived risk preferences. Originality/value: The paper advances psychological methods in marketing, and provides a partial answer to the difficulties of financial advice giving.

Place, publisher, year, edition, pages
2014. Vol. 32, no 3, 245-263 p.
Keyword [en]
Banking, Marketing
National Category
Business Administration
Identifiers
URN: urn:nbn:se:kth:diva-116371DOI: 10.1108/IJBM-02-2013-0014Scopus ID: 2-s2.0-84897951989OAI: oai:DiVA.org:kth-116371DiVA: diva2:589158
Note

QC 20150316. Updated from submitted to published.

Available from: 2013-01-17 Created: 2013-01-17 Last updated: 2017-12-06Bibliographically approved
In thesis
1. Financial Advisory Services: Exploring relationships between consumers and financial advisors
Open this publication in new window or tab >>Financial Advisory Services: Exploring relationships between consumers and financial advisors
2013 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The need for more knowledge about different aspects of financial advisory services has been highlighted by scholars of many disciplines, and calls for more in-depth studies of this practice have been put forward. The purpose of this thesis is to answer this call and, thereby, enhance knowledge about financial advisory services and the provision and receipt of advice occurring in a face-to-face encounter between a professional advisor and a consumer. The thesis consists of five papers in which different methodological and theoretical lenses are applied to the study of the practice. A mixed methods approach is applied to the object of study—financial advisory services. This approach entails using qualitative methods to analyze video-recorded interviews and quantitative methods to analyze survey data. The qualitative methods are used primarily to generate new constructs and ideas, whereas quantitative methods are used more to confirm and deepen the knowledge of constructs and relationships.

The findings show that there are important aspects of financial advisory services that have been previously neglected. The characteristics of both consumers and advisors, as tested from the aspect of gender, are shown to have importance for both consumer and advisor perceptions of different aspects of core elements of financial advisory services. Focusing on the micro-foundations of the relationship between customer and advisor in financial advisory services reveals the importance of mirroring for customers in perceiving a relationship. Two types of interactions that customers do not consider to be relationships are identified. Scholars have referred to occasions in which customers are too trusting as “the dark side of trust”, meaning that the customer becomes less actively involved in the relationship with increasing advisor trust.  Applying a concept borrowed from psychotherapy—working alliance—has opened up possibilities for further exploration of the inner workings of the financial advisory session. This thesis proposes and tests the concept of a working alliance as a way of enhancing theory and, thereby, the understanding of relationships between consumers and service providers.

The results of this thesis have implications for theory by contributing to the understanding of relationships. The implications for policymakers, the industry, and advisors and customers are many. Exploring the practice of financial advisory services lays the groundwork for discussions on, and elaborations of, regulations, educational programs, and hiring practices within the industry, as well as on financial literacy programs directed toward consumers.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2013. 114 p.
Series
TRITA/KTH/CEFIN-DT, ISSN 1654-9376 ; 07
Keyword
financial advice, conusmer finance, financial services, financial decisioin making, risk perception, relationship, working alliance
National Category
Business Administration
Identifiers
urn:nbn:se:kth:diva-116207 (URN)
Public defence
2013-01-25, D1, Lindstedtsvägen 17, KTH, Stockholm, 14:00 (Swedish)
Opponent
Supervisors
Note

QC 20130117

Available from: 2013-01-17 Created: 2013-01-16 Last updated: 2013-01-18Bibliographically approved

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Söderberg, Inga-Lill

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