A recent study suggests that earning clients’ trust is an uphill battle
With increasing focus placed on investor protection and upholding clients’ interests, financial advisors may be wondering whether there’s a climate of distrust in the industry. And if there is an uneasy relationship between FAs and the public, forging relationships can be difficult.
According to a recent survey by wealth management firm Personal Capital, 32% of US adults think that financial advisors would cheat an investor if given the chance, reported Financial Advisor IQ. The March poll surveyed 2,178 American adults, 1,301 of whom had investor accounts.
A majority of the respondents (70%) reported becoming more suspicious because of recent industry developments. The study also found a certain lack of knowledge of the industry; 46% of respondents incorrectly believe that US FAs are legally bound to uphold the client’s best interests above their own, and 31% were not sure.
The respondents also showed a lack of knowledge regarding what they pay for. Among those with investment accounts, a fifth know they pay for investment management services, but don’t know how much. Twenty-eight per cent don’t look at fees when choosing their account; among investors younger than 34, the percentage increases to 47%.
Independent investors may be the hardest segment to reach. Among US respondents without an advisor — a segment that reportedly comprises more than half (54%) of the American population — 45% reported not trusting them.
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According to a recent survey by wealth management firm Personal Capital, 32% of US adults think that financial advisors would cheat an investor if given the chance, reported Financial Advisor IQ. The March poll surveyed 2,178 American adults, 1,301 of whom had investor accounts.
A majority of the respondents (70%) reported becoming more suspicious because of recent industry developments. The study also found a certain lack of knowledge of the industry; 46% of respondents incorrectly believe that US FAs are legally bound to uphold the client’s best interests above their own, and 31% were not sure.
The respondents also showed a lack of knowledge regarding what they pay for. Among those with investment accounts, a fifth know they pay for investment management services, but don’t know how much. Twenty-eight per cent don’t look at fees when choosing their account; among investors younger than 34, the percentage increases to 47%.
Independent investors may be the hardest segment to reach. Among US respondents without an advisor — a segment that reportedly comprises more than half (54%) of the American population — 45% reported not trusting them.
For more of Wealth Professional's latest industry news, click here.
Related stories:
Advisor group slams OSC priorities
Are happy shareholders turning a blind eye to bank misconduct?
