Despite a push across the financial industry to provide investors with more information and better transparency, a lot of investors still do not trust their financial advisors very much.
A study by Phoenix Marketing International released Thursday shows that a significant portion of investors think the information their advisors are giving them, particularly on portfolio performance, may be biased in the advisor’s favor.
“The State of Investor Trust & Transparency” study says 35 percent of investors are not confident the information they receive from their advisors is reliable. In addition, 41 percent say they either are not provided with core information about investment performance from their investment advisor or 401(k) plan provider, or they do not know if they are provided with the information.
Despite advancements in technology and efforts on the part of many advisors to provide clients with relevant information, there are significant gaps in the effectiveness of the reporting, the study says. Some investors see an inherent conflict of interest with investment advisors being the source of performance reports.
In addition to receiving valid investment performance reports, clients want the information they receive to be simple and readable. They would like their returns compared to the returns of other advisors or firms, and the want their returns compared to the returns of other investors with similar goals, the study says.
The study by Phoenix Marketing International, a financial research organization based in Rhinebeck, N.Y., included 2,626 individuals with at least $100,000 in investable assets.