Along with car mechanics and surgeons, the wealth management segment of financial services is one of those professions where trust is paramount. So when a recent report from Cerulli Associates found that last year marked the first time a majority of investors surveyed said they felt confident that financial services firms have their best interests in mind, it’s debatable whether that’s a cause for celebration or a sad reflection on the state of the financial services industry.

To be clear, the survey conducted by research shop Cerulli and Phoenix Marketing International dealt mainly with the financial advisory space. Their survey comprised affluent investors with more than $250,000 in investable assets and the near-affluent who earn more than $125,000 annually and are younger than age 45.

Since 2008, the survey has asked investors whether they agree, disagree or are neutral regarding the following statement: “I trust that financial services firms are looking out for my best interests.”

In 2020, 54% of respondents agreed with that premise. In the prior year, 45% were in the “agree” camp. And it was in the 40% range going back to 2015. Before that, the “agree” number was in the 30% range, including a low of 29% in 2010.

That’s the macro view. Breaking that down by provider type and advice-orientation type presents a micro view that clarifies the picture. According to Cerulli, clients served by bank advisors had the highest trust level, at 72%.

That was followed by high-net-worth-focused private banks (70%), wirehouses (64%), the independent channel, including RIAs and broker-dealers (63%), other full-service broker-dealers not in the independent channel (62%) and retirement plan providers (51%).

On the negative side of the ledger, clients served by direct investing platforms and bank deposit programs assigned trust levels of 46% and 39%, respectively.

Regarding how investors interact with service providers, those who are directly served by financial advisors felt the highest trust levels at 71%. Self-directed investors had the lowest trust level, at 38%.

Still, the improved numbers aren't cause for celebration. Considering the importance that professional wealth management has in people’s lives, trust levels in the range of 70% or 60% seem lame.

“The numbers aren’t great, but I’d preface that by saying that when people are asked about their individual advisors they’re much higher,” Scott Smith, Cerulli’s director of advisor relationships, said in an interview. “I think about it like Congress, where people like their congressman but hate the institution.”

He noted that frequent headlines about malfeasance and skullduggery committed by financial advisors of all stripes give the profession a black eye, contributing to low trust levels.

In its report, Cerulli stressed that its research has consistently found that integrity, transparency and empathy are the leading factors that prospective clients want from wealth management providers. Both the report, and Smith, posit that advisor firms that operate their wealth management practices under a fiduciary standard will gain the most trust—and, thus, more business.

“We all say fiduciary is important to us, but then we as an industry are pushing back on that by saying ‘this is close enough or good enough, or that people wouldn’t be able to get service if we didn’t have a brokerage model,’” Smith said.

“We want trust to increase, and those firms that pursue a fiduciary standard as a core tenant in their wealth management practice are the ones that should benefit over time,” he added.

As indicated above, one of the discernible features of the annual Cerulli/Phoenix Marketing International survey of trust is that the numbers generally have been trending slightly higher year over year, culminating in last year’s aggregate positive reading of 54%. Smith offers two possible reasons for that.

“A lot of that has to do with the stock market in general,” he said. “People think their advisors are great as long as the market is going up. Beyond that, regulation is getting a little bit stronger, and I think the move from being stock brokers to being financial planners is affecting the industry overall and hopefully trending [feelings of trust] in the right direction.”