Ethical behaviour and transparency were found to be “more important to investors than performance”, a summary of the study’s findings said, but only 53% of investors in the US, UK, Hong Kong, Canada,and Australia trust investment firms to do what is right.
Retail investors are less trusting of the industry (51%) than their institutional counterparts (61%), and investors in the US (44%) and UK (39%) are less trusting than those in Hong Kong (68%), according to the study, which was conducted online in June and polled some 1,604 retail and 500 institutional investors in North America, Europe, Asia and Australia.
The CFA Institute/Edelman Investor Trust Study focused on asset owners only, not intermediaries, and was prepared by Edelman Berland, a market research firm.
Capital markets more trusted
Investors’ lack of trust in the investment industry does not carry over to the world’s capital markets, the researchers found, with nearly three in four of those surveyed saying that they were optimistic about their ability to earn a fair return in this arena.
Still, the “intensity” of that confidence is described as low, with just 19% of investors saying that they “strongly” agreed that they had a “fair opportunity” of making money with their capital market investments.
John Rogers, CFA president and chief executive of the CFA Institute, said the survey’s findings sent “a clear message” to the investment profession.
“Trust is absolutely critical to the future of finance, and it is up to all of us to help shape a more trustworthy financial system,” Rogers said. “Investors believe the professionals they work with have been the most effective in earning their trust.
“This represents a significant opportunity for investment professionals and firms to actively build a culture where ethical practices are valued as highly as investment performance.”
Among the survey’s other key findings:
- Responsibility for building trust lies with the individual: a little more than half of those surveyed, or 55%, said the investment managers they work with have been the most effective in enhancing their trust in the capital markets – more than investment firms (41%), national regulators (38%) or global regulators (35%);
- Investors expect governments to help build trust in capital markets, with 52% pointing to national and global regulators as having the greatest opportunity to effect change and enhance trust – “far more than individual investment management professionals (28%) and investment management firms (13%)”
The CFA Institute is a global certification and standard-setting organisation, which recently began to take a more forceful position with respect to ethical standards and behaviour in investment markets and financial services. It has more than 118,000 members – including 108,000 CFA charterholders – in some 141 countries and territories.
Edelman is the world’s largest public relations firm, with 67 offices and more than 4,800 employees worldwide.
To download an eight-page executive summary of the CFA Institute/Edelman Investor Trust Study, click here.