Edelman and the CFA Institute released today a study that examines the trust relationship in between investors and investment management focusing on the key components to building credibility. As investors worldwide have shown since the downturn began, ao too their eroded trust in the investment profession has had a dramatic and negative impact on us all.
According to the CFA Institute/Edelman Investor Trust Study, just 53 percent of investors in the U.S., U.K., Hong Kong, Canada and Australia trust investment firms to operate above the line. And retail investors are even less likely to cast a vote of confidence in the industry. Interestingly, the study also shows investors in the US and the UK are less likely to trust institutions than their counterparts in Hong Kong. John Rogers, CFA, president and CEO of CFA Institute, had this to say about the study’s findings:
“This survey sends a clear message. 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. 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.”
As for going forward, the study indicates taking responsibility for reversing this course of trust is firmly on the shoulders of the management firms. Putting investor interests first is the most critical actionable variable managers can take, investors surveyed indicated that confidence in managers is the single most important factor in hiring a firm. High returns and fee amounts came in way down the list of desired characteristics by stated by those surveyed.
The CFA Institute/Edelman Investor Trust Study polled 2,104 retail and institutional investors in North America, Europe, Asia and Australia. Importantly, the study focused on asset owners only (not intermediaries) with 1,604 retail and 500 institutional investors included. It was conducted online from June 7 to June 25, 2013 and produced by Edelman Berland, a global, full-service market research firm.