Trust in the financial services industry has increased dramatically among retail investors around the world despite the bad publicity plaguing the industry, with Australia, the US and the UK contributing to half the gain, a CFA Institute study showed.
The survey, titled ‘From Trust to Loyalty: A Global Survey of What Investors Want’, follows from a 2013 study measuring the opinions of retail and institutional investors worldwide, and showed 50 per cent of retail investors in Australia trust businesses in the financial services industry to do what is right.
Meanwhile, 61 per cent of retail investors and 57 per cent of institutional investors worldwide viewed the industry favourably.
However, CFA Institute president and chief executive, Paul Smith, warned that it was not all good news.
“With higher trust comes higher expectations and the gap between what investors want and what we as a profession are delivering is cause for concern, and action,” he said.
Investor trust continued to rank in the bottom tier among different industries, scoring ahead of only the automotive, entertainment, and media industries, and ranking below the likes of banks, technology, and telecommunications.
The study also found investors expected higher levels of transparency than ever before and remained heavily focused on returns, while also expecting clear communication about fees, and transparency on conflicts of interests.
The biggest gaps between investor expectations and what they received related to fees and performance. Clients wanted fees that aligned with their interests, transparent, and aligned to the value of what they were getting from their investment firms.
Loyalty to managers would be put under the microscope during a crisis, with 27 per cent of retail and institutional investors saying they would re-think their manager based on their performance during crises.
Younger investors aged 25 to 44 were most concerned, while those over 65 who were likely to be in a drawdown phase and most exposed to the downturn were least perturbed.
