While many believe that investment performance is the only thing that matters to clients, a recent CFA Institute study titled ‘From Trust To Loyalty: A Global Survey Of What Investors Want’ revealed that 80% of retail investors are more concerned with the commission and incentives paid to their advisors.
These investors want their advisors to disclose their earnings they receive from the fund houses on the investment advice.
CFA Institute has conducted this survey across four continents - North America, Europe, Asia (including countries like India) and Australia in which 3,312 retail investors have responded to the survey. The aim is to see what matters to retail investors and where they think the financial distribution industry is falling short.
The survey found that 79% of retail investors want to understand fees (expense ratio) as to how much they are paying and for what they are paying. These investors want their investment firms to explain to them about fees and costs.
Source: CFA Institute study
However, 73% investors say that the investment performance from their portfolios is what matter to them. These investors expect higher returns from their investment portfolio compared to other firms.
The survey also found that underperformance of investment instruments is the key reason for retail investors to sack their advisors.
Another key reason why investors sack their advisors is data breach. Over 43% of retail investors would sack their advisors if they compromise their confidential information, shows the survey data. “Clearly, data breaches across industries from health care to retail have shaken consumer confidence in financial services as well”, said the report.