Investors have more trust in their financial advisors than they have in financial services firms, according to a new survey.
Two-thirds of surveyed investors said that they expect advisors to put their clients’ interest first when recommending products and services, which is double the number who feel the same way about firms, according to Cerulli Associates, the Boston-based financial research firm.
"While firms have managed to build trust back to pre-crisis levels, the more disconcerting fact is that less than 30% of investors believe their interests come first at the firm level," Scott Smith, a director at Cerulli, said in a press release.
Only 28 percent of households said they believe firms put their financial interests first in separate surveys in 2008 and 2012, according to Cerulli. The number of investors who feel firms do not look out for their best interests rose from 37 percent in 2008 to 41 percent in 2010.
Cerulli noted that the survey also reflects what may be unrealistic expectations on the part of some investors.
Although two-thirds of investors said they expect a fiduciary standard from their advisors, the reality is that most investors actually hold a brokerage account and are only entitled to a suitability standard from their advisors, Cerulli noted.
“Investors expect that their advisors are obligated to put their interests first, but this is not currently the case for most investors,” the authors of the report said.
Nonetheless, Cerulli stated, the survey does indicate what it takes for financial services firms to fulfill the needs of investors.
“Firms that fully embrace and promote their roles as fiduciary providers are most likely to increase their opportunities among retail investors,” Cerulli said.