Trust, in some form, is at the center of all financial transactions. Investors must have confidence in the financial system overall, and trust is especially important for investment management, since client outcomes manifest only over a future horizon.
CFA Institute defines the three themes affecting investor trust today:
– A divided trust landscape,
– Technology as a trust multiplier; and
– The additive factors of values and personal connection.
Trust level in the financial industry among retail investors
Key insights for our Australian market
– Australian retail investors with a financial advisor are more trusting of the financial services industry; more than one in two people with an adviser (58%) trust the financial services industry, compared to less than half of those (39%) without an adviser. That compares to more than two-thirds of investors globally with an adviser (69%) who trust the financial services industry.
– Retail investors also believe that having a financial adviser adds value. Among those with a financial adviser, 85% agreed that there is fair opportunity to profit by investing in capital markets (an increase from 81% in 2020), compared to 72% of those without an adviser (an increase from 57% in 2020). Of Australian retail investors, 86% agreed that there is a fair opportunity to profit.
– Retail investors in Australia are less trusting of financial advisers than their global peers. While 42% said they trust financial advisers, that jumps to 56% of all retail investors globally.
– The main reasons that Australian retail investors leave an adviser are underperformance (51%), followed by a lack of responsiveness (37%), inadequate data security (35%) and fees that are too high (35%).
– Advice is still the domain of humans, with 81% of Australian retail investors more likely to trust human advice versus robo-led advice. China is the only market where fewer than half of retail investors (34%) prefer a human adviser.
The report was compiled using survey data from 3,588 retail investors and 976 institutional investors from 15 global markets.
Replay: How the Australian Investment Management Industry can earn Investors’ Trust
Hear our expert panel unpack the insights from the 2022 Investor Trust Study report and how trust is impacting investment behaviour in Australia and New Zealand, and the role technology and personalisation play in enhancing investors’ trust.
We hope you take some value insights from the discussion.
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