Communication the key to rebuilding trust

Fund managers, super funds and other financial services organisations still have a long way to go before they rebuild the investor trust they lost during the global financial crisis (GFC), according to the new research by Investment Trends.

The report, entitled the ‘2010 Investor and Member Sentiment and Communications Report’, found 46 per cent of active investors no longer trusted fund managers and were more likely to invest directly in the future — down from 54 per cent in 2009. The main reasons for the distrust were poor communication and hidden fees, the report stated.

Investment Trends analyst Uwe Helmes said it was surprising that poor performance was “less important as a cause of distrust than poor communication”.

“It seems that some investors and members are willing to forgive poor performance as long as their provider communicates honestly and openly — particularly about fees,” Helmes said.

He pointed out that investors and members were still much less confident in their providers than before the GFC hit, although this year’s survey showed some improvement.

“Among financial services organisations, fund managers and super funds are suffering from the most pronounced loss in investor confidence, with voluntary contributions and new fund inflows scarce, and many investors considering switching super funds or pulling out of managed funds altogether,” Helmes added.

According to the report, frequent and open communication is the key to regaining trust, “with organisations [that] excel in communication also scoring highly on customer satisfaction”.