Financial advisors are supposed to help investors navigate the minefield of investments. However, new research shows that people’s trust in financial advisers is not high and that many people do not think they are getting the best advice.
Research from the CFA Institute has discovered that investors often do not trust financial advisors. In their survey of 3,000 investors, it was discovered that for people to trust an advisor they must feel they are given all the details about fees, that they have proper management of conflicts of interest and that the investment advisor can generate returns that beat the benchmark.
Disclosure of Fees
It turns out that only 44% of individuals feel that financial advisers deliver on these important areas, and only 48% trust them to disclose all their associated fees. It seems it is the disclosure of fees that is one of the most important areas where investors feel short-changed. Other important areas which cause investors to leave their advisor are under-performance and lack of communication.
Codes of Conduct
It is interesting to note that if a finance company adheres to a voluntary code of conduct for the finance industry, it increases trust in them from their investors. Not all firms in the finance industry are complying with voluntary codes of conduct and industry standards that have been brought in to protect consumers, especially payday lenders.
This lack of adherence to standard codes of conduct has led to a lack of trust among the public when it comes to trusting finance firms in general. This underlines the importance of ethical considerations and transparency when choosing a financial adviser.
One way that financial advisers can increase their investors’ trust and attract new customers is to use appropriate, useful and highly trustworthy software. Much of the new regulated software for financial advisers, can offer an easy and secure way for financial firms to meet regulatory requirements, streamline their business and increase profits.
Much of this software can integrate with other types of software, platforms and services to provide suitable advice for investors. Options such as automated advice can offer fast guidance to investors looking for reassurance about certain products or financial issues, leaving the finance company free to focus on other areas where more personalised advice and services are needed.