Fee disclosure key to investor trust, survey finds

Over eight in ten investors say trust in advisors is driven by full fee disclosure, according to a survey by the investment professionals association, the CFA Institute.

The 12-market survey, ‘The Next Generation of Trust: A Global Survey on the State of Investor Trust’, revealed the gap between investors’ expectations and advisors’ delivery.

While 84% of retail investors surveyed said their trust was driven mostly by full disclosure of fees, only 48% said advisors deliver satisfactorily on disclosure.

Paul Smith, chief executive of the CFA Institute, said: “Higher trust comes with higher expectations, and we are not there yet until we can consistently prove our value to clients by providing solutions, not simply products. We need universal disclosure of fees and performance to drive home this message.”

While twice as many retail investors placed an emphasis on trust over performance in their decisions to hire financial advisers, the survey found that underperformance and lack of communication or responsiveness are the reasons they leave a relationship.

About three-quarters of retail investors and institutional investors say it is important that the firm they work with employs investment professionals with credentials from respected industry organisations. 

The CFA Institute together with Greenwich Associates surveyed 3,127 retail investors and 829 institutional investors from Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Singapore, the United Arab Emirates, the United Kingdom and the United States.

©2018 funds europe

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