The majority of UK investors do not trust investment management firms “to do what is right”, according to research by the CFA Institute.
The CFA Institute/Edelman Investor Trust Study found that just 39 per cent of investors in the UK have high levels of faith when it comes to the investment management industry, compared with 53 per cent of global investors.
CFA Institute president and chief executive John Rogers says: “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.”
However, the poll found that investors place more faith in the individuals managing their money. Some 55 per cent say that fund managers they work with have been the most effective in enhancing their trust, while only 41 per cent cited investment firms.
The survey, which polled more than 2,100 retail and institutional investors in the UK, the US, Hong Kong, Australia and Canada, also shows that 38 per cent say the most important attribute in hiring an investment manager is trust that they will work in the client’s best interest.
In contrast, achieving high returns was cited only half as often and fee amounts/structure only a fifth as much.
Furthermore, investors say behaviour-related attributes – such as transparent and open business practices, responsible actions to address an issue or crisis and ethical business practices – are most important for trust building between them and fund managers than performance-related attributes like delivering consistent financial returns.
CFA Institute managing director for standard and financial market integrity Kurt Schacht says: “By focusing only on performance-centric standards, the industry is missing opportunities to build trust.
“Investors indicate in this study that they want a culture shift – a renewed focus on ethical behavior. Individual investment managers must be transparent, demonstrate integrity, and communicate clearly to strengthen client relationships and preserve trust in the industry and the markets at large.”