Press release by CFA Institute – Despite uptick on trust in financial services, investor loyalty remains fragile.

Investors are expecting higher levels of transparency than ever before, holding their investment managers to the highest ethical standards, and are laser-focused on returns, according to a newly released study from CFA Institute, the global association of investment professionals.

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.

"The bar for investment management professionals has never been higher," said Paul Smith, CFA, president and CEO of CFA Institute. "Retail and institutional investors, as always, crave strong performance, however both groups also demand enhanced communication and guidance from their money managers. Building trust requires truly demonstrating your commitment to clients’ well-being, not empty performance promises or tick-the-box compliance exercises. Effectively doing so will help advance the investment management profession at a time when the public questions its worth and relevance."

Key findings from the study include:

While trust has increased, investors remain concerned about ethics, transparency and performance.

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Since 2013, retail investors show a significant increase in trust of the financial services industry – rising from 50 percent to 61 percent. About half the gain is thanks to strong increases in the U.S., U.K. and Australia. The other half is due to higher absolute trust levels in markets not included in the 2013 study, notably China, India and Singapore.
Both retail and institutional investors share the view that financial professionals are falling short on issues of fees, transparency and performance. Among retail investors, the most important actions from an investment firm are that it "fully discloses fees and other costs" and "has reliable security measures." These even surpass protecting their portfolio from losses. Among institutional investors, "acts in an ethical manner" rated as the most important attribute followed by "fully discloses fees and other costs."
That’s not to say that performance is unimportant – 53 percent of retail investors and 60 percent of institutional investors cited "underperformance" as the biggest factor that would lead them to switch firms. This was followed by "increases in fees," "data/confidentiality breach," and "lack of communication/responsiveness."
Forty-five percent of institutional investors and 43 percent of retail investors would leave an investment firm if data security were to be compromised, demonstrating the importance placed on cybersecurity in today’s markets.
The study found that once an issue has triggered an investor to re-evaluate their relationship with an investment manager, the majority – 76 percent of retail investors and 74 percent of institutional investors – are likely to leave within six months.
"While an increase in overall trust in the financial services industry is a net positive for financial professionals," continued Smith, "performance is no longer the only ‘deal breaker’ for investors. They are continuing to demand more clarity and service from financial professionals and, with the rise of robo-advisors, they have more alternatives than ever before. Further, if investment professionals don’t provide this clarity, then regulators may force them to, for better or worse."

Investors are anxious about global markets, and do not believe their investment firms are prepared.

Investors revealed a growing anxiety about the state of global finance. Almost one-third of investors feel that another financial crisis is likely within the next three years (33 percent of retail investors/29 percent of institutional investors), with significantly more in India (59 percent) and France (46 percent). In addition, only half of all investors believe their investment firms are "very well prepared" or "well prepared" (52 percent retail investors/49 percent institutional investors) to manage their portfolio through a crisis.
Study reveals key regional differences in what investors value from financial professionals with implications for robo-advisors.

Looking ahead three years, the majority of retail investors in Canada (81 percent), the U.S. (73 percent) and the U.K. (69 percent) say they will still value the guidance of an investment professional to help them versus having the latest technology and tools.
However, the majority of retail investors in India (64 percent) and China (55 percent) and half of investors in Singapore believe having access to the latest tech platforms and tools will be most important to executing their investment strategy. Sixty-eight percent of retail investors in India and 56 percent in China consider brand to be more important than people when it comes to trust.

"This year’s results show an important split between the needs of investors in more developed economies and those who represent the future of the global financial industry," said Smith.

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."


The CFA Institute Trust to Loyalty Study is a study of trust in the investment community and the evolving needs of investors. It was produced by research firm Edelman Berland and consisted of a 15-minute, online survey conducted October 19 – November 11, 2015. The Trust to Loyalty Study online survey sampled 3,312 retail investors 25+ years old and with investible assets of at least $100,000 in the United States, Canada, United Kingdom, France, Germany, Australia, India, Singapore, China and Hong Kong. It also samples 502 institutional investors with assets of $10 million or more in the United States, Canada, United Kingdom, Singapore, Australia and Hong Kong. The margin of error for Total Retail Investors is ± 1.7%; the margin of error for Total Institutional Investors: ± 4.5%.