The financial services industry has some work to do when it comes to generating trust among investors, according to a CFA Institute study.

Only 46% of retail investors trust the financial services industry, according to the survey, entitled, "Earning Investors’ Trust,". that was released in a teleconference today. The financial services industry's trust level fell far below the 68% who said they trust the medical industry and 60% who have faith in technology.

When asked about individuals, rather than industries as a whole, only 23% said they have a high level of trust in advisors versus 77% who had a high level of trust in doctors. Politicians brought up the rear with only 6%.

Financial services came in seventh among retail investors for the 12 industries ranked.

Institutional investors have more faith in financial services, ranking it third at 65% behind technology and the pharmaceutical industry.

Financial advisors fell especially short when investors were asked if the advisors always put the clients’ interests first. Most retail investors said they believe financial advisors are legally required to act in the client’s interest above their own, but only 35% of retail investors said their advisors actually do that. Among institutional investors, only 25% think their investment firms always put client interests first, the survey said.

Although most investors said the fees they pay are fair, high fees are still the number one reason for switching firms. At the same time, nearly half of all retail investors would pay even more for more customized products. The willingness to pay more goes down as the age of the client goes up, the survey showed.

The media and government brought up the rear for both retail and institutional investors. The survey included 3,525 retail investors and 921 institutional investors from 15 global market areas and was done at the end of 2019, before the onset of the coronavirus pandemic. 

The survey concluded that investors want more information and innovation from their financial services firms and from advisors, and they want more influence in their interactions with the investment management industry, the CFA Institute said.

“Trust in the investment management industry during this time is more valuable than ever,” Rebecca Fender, senior director of Future of Finance Research at the CFA Institute, said in a statement. “What does it take for someone to put their capital at risk and trust their funds to someone else to manage? Investment professionals who understand and navigate the layers of investor trust will be better equipped to serve their clients and demonstrate how the investment industry can better serve society.”

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