IFAs are the most trusted source of information for retail investors, shows a survey conducted by CFA Institute.
The survey covered 3,127 retail investors and 829 institutional investors worldwide, including 100 retail investors and 84 institutional investors from India.
Out of the 7 sources of information for retail investors, 65% said that their personal financial adviser is the most trusted source, followed by friends and family (10%), online research (8%), academic experts and books (4%) and investment newsletters (4%).
The report attributed this to accessibility and transparency in advisory practices. “Most retail investors feel that their advisors are accessible, transparent, and fair. 83% reported their advisors are accessible, although lower responses in Hong Kong and Singapore may be why they use alternative advice sources. Those whose advisors were more accessible were also more likely to trust the industry overall (54% vs. 30% trust levels).”
“In terms of transparency, most retail investors said their advisor was very or somewhat transparent around fees, market events, and other features, though less than half thought their advisor was very transparent around conflicts of interest. Regarding fees, 72% thought the fees they paid were fair, 10% thought they were unfair, and 18% were unsure,” added the report.
The survey also measured retail investors’ response to the value of robo advice vis-à-vis brick-and-mortar advisors. A majority of retail investors say they will still value the guidance of an investment professional to help them versus having the latest technology and tools. While young investors (aged 25-34 years) like technology, a majority of them (72%) also said that they preferred to have a person to help them navigate and execute their investment strategy.
Besides, the survey also captured the perception of retail investors towards the financial services industry. Almost 71% investors in India said that they ‘trust’ the financial services. The level of trust towards financial services industry was low in countries such as UK, Australia and Germany.
