A survey by CFA Institute titled ‘Earning Investor’s Trust’ shows that retail investors in India are more likely to trust a human advisor than investors in other regions.
About 82% of Indian retail investors prefer human advisors over robo-advisors. Only 18% of retail investors in India says robo-advisor is better than or equal to human advice.
The online survey covered 3,525 retail investors and 921 institutional investors across many countries including India.
Here are some of the interesting findings from the survey. Remember that the findings include respondents from other countries as well.
Technology and financial advice
The survey shows that overall, institutional investors give more weightage to technology advancement in financial advice.
Among retail investors, the appetite for new products is very different based on whether they have an advisor or not. Nearly two-thirds of retail investors with an advisor say it is important for their advisor to provide access to new investment products before they become widely available. In contrast, only about one-third of retail investors without an advisor are interested in investing in new investment products before they become widely available.
The conclusion is regardless of who creates the products, advisors will need to provide access to new products and curate technology to meet client expectations going forward.
Artificial intelligence in investing
The survey suggests that AI needs to be combined with human intelligence, including judgment and economic intuition. The desire for a hybrid model is also evident in retail investors’ response to a question about whether they would prefer a financial adviser that is data-driven and very quantitative (39% selected this) or has economic intuition and extensive market experience (61% selected this).
Investor trust
Investors trust advisors based on strong performance track record, professional credentials, adoption of industry codes and demonstration of ongoing professional learning.
Further, the survey finds that half of retail investors (49%) and a majority (68%) of institutional investors feel their advisors are well prepared to manage financial crisis.
Top goals of investors
The survey reveals that across regions, the top investment goal for retail investors is retirement. By market, this is the case everywhere except mainland China, where providing for beneficiaries is prioritized, and India where top goals also include emergency funds and saving to start a business.
The fee conversation
A significant majority of retail investors (83%) and institutional investors (75%) surveyed agree that one of the most important items in creating a trusted relationship is transparency in fees and other costs.
