Monday, June 6, 2016

The 2016 CFA Institute Survey: Investors Want Transparency, Ethics, Performance

CFA Institute Reports on  A Global Survey of What Investors Want

According to a newly released study from theCFA Institute investors want transparency, ethics, and performance. The survey is clear that despite an uptick on trust in financial services, investor loyalty remains fragile.
The survey, From Trust to Loyalty: A Global Survey of What Investors Want”, a follow-up to the 2013 Edelman/CFA Institute Investor Trust Study, measures the opinions of both retail and institutional investors globally. The findings reveal that investors want regular, clear communications about fees and upfront conversations about conflicts of interest. The biggest gaps between investor expectations and what they receive relate to fees and performance. Clients want fees that are structured to align their interests, are well disclosed and fairly reflect the value they are getting from their investment firms.

In this survey, we investigated the level and nature of trust within the investment community, surveying retail investors and institutional investors around the world. We asked how much they trust financial services and how loyal they are to their current investment firms. The findings, including comparisons with the 2013 CFA Institute and Edelman Investor Trust Study (PDF), offer investment professionals and firm leaders insights into how to strengthen client relationships and build better firms.
Executive Summary
  • Retail investors’ trust in financial services increased in the United States, United Kingdom, and Australia, and fell in Canada and Hong Kong since 2013.
  • Investment costs are even more important than performance to investors globally, and firms are not meeting expectations in this area.
  • Institutional investors rank ethical standards above all else in important attributes of a firm.
  • Investors in China and India lean toward robo-adviser options, whereas investors in Canada, the United States, and United Kingdom still value human interaction.
  • Transparency and cyber security are key concerns among investors.
  • A third of investors feel that another financial crisis is likely within the next three years, and about half of investors lack confidence in their firm’s ability to manage through a crisis.
The takeaway for financial professionals – investors expect more than just performance.
“Investor demands have become significantly more dynamic,” continued Smith. “Along with delivering performance, investment professionals must also provide transparency around fees and investment decisions, align their interests with their clients’, and provide robust data security measures. Those investment firms that do strike this balance will engender greater trust among investors which, in turn, will drive growth.”