Our third investor trust survey examines changing investor expectations and how a new generation of investors and new investment tools are affecting the nature of trust.
CFA Institute asked more than 800 institutional investors and 3,100 retail investors in 12 markets about their current level of trust in the financial services industry. Trust is the bedrock that supports our financial markets and underpins the investment management industry. Our third investor trust survey examines changing investor expectations and how a new generation of investors and new investment tools are affecting the nature of trust. Investors have a strong level of trust in the financial system overall, and trust in the industry has increased slightly. Nonetheless, challenges remain. Investor expectations are high and there are gaps between what investors want and what the industry delivers.
Trust in Financial Services Industry: Reputation versus Realities
While investor trust overall in financial services is only slightly higher, there are many positive signs regarding actual client experiences. Reputational issues for the industry remain, but there are ways investment professionals are effectively building and maintaining trust with clients.
The Bottom Line Value of Trust through the Client Life Cycle
Among the key takeaways from the survey, we found that clients consistently rank trust as the biggest differentiator in hiring an investment firm. Trust also contributes to whether a client will refer others or expand the relationship with additional mandates. Underperformance is the primary reason clients leave an adviser; understanding client goals and fears are ways to build trust and weather uncertainty.
Technology Enhances Investor Trust but Does Not Replace the Need for Humans
Investors of all ages and from all regions want more technology applied to investing, and trust in technology is generally high. The effective use of technology increases trust in a financial adviser or firm, and new blockchain technology holds the promise of creating more trust in the system. For advice, however, clients still place greater trust in human advisers while robo-advisers are the least trusted segment of the industry.
The Trust Equation: Credibility and Professionalism
Credibility is composed of easily observed and highly valued factors such as track record, brand, credentials, and adherence to a code of conduct. Professionalism is more difficult to assess but is essential to trust. Professional competency, knowledge, and values are the key factors informing the perception of professionalism. Putting clients first, being transparent about fees and performance, and demonstrating expertise all help advisers continue to earn the trust of their clients.
Watch the recording of our webinar from 26 April on the results and implications of the survey.