The CFA Institute, the global association of investment professionals, recently published Enhancing Investors’ Trust – the 2022 CFA Institute Investor Trust Study, the fifth in its biennial series, which measures levels of trust and explores the factors driving confidence in financial services among retail and institutional investors in 15 markets globally. The study reveals that confidence in financial services has reached an all-time high.
The study reveals five factors that boost confidence in financial services: strong market performance, fee compression, transparency through technology, better access to markets and new personalized products. The study identifies increased use of technology as a major trust driver, simplifying investment by improving access to markets and information. Half of retail investors and more than four-fifths of institutional investors say the increased use of technology has increased trust in their advisor or asset manager, respectively.
The study also finds that personalization adds to trust, and that advisors who personally understand their clients or offer investment products that align with clients’ values and beliefs can deliver the most value.
William Tohme, CFA, Senior Regional Manager, Middle East and North Africa at the CFA Institute, said: “As one of the most trusted countries in financial services globally, the Emirates’ path United Arab Emirates towards a resilient and diversified economy was marked by efforts to maintain the stability and integrity of the financial system.
The surge in confidence we are currently seeing is a positive indicator, and our latest report, Improving Investor Confidence, shows how different factors have helped maintain and strengthen investor confidence, technology, alignment on values and personal relationships appearing as key determinants in a new, more resilient dynamic.
The millennial investor segment champions technology and personalization, showing relatively high trust in companies such as bot advice, digital apps, investment alerts and digital nudges to transparent strategy execution. However, face-to-face advice remains a preference for three-quarters of investors, underscoring the importance of the human element – a notion that has remained constant since 2020.”
- The proportion of institutional investors with high or very high confidence in financial services rose to 86% (65% in the previous survey). Among retail investors, confidence levels are up to 60% (previously 46%).
- Trust in financial services has reached an all-time high, with India being the top market with the highest level of trust at 87%, the United Arab Emirates in second place with 78% and China in third place with 76%.
- Millennial retail investors, and particularly those between the ages of 25 and 34, are the most confident in financial services (72% of this cohort have high or very high confidence).
- For the first time, most retail investors globally (56%) expect that over the next three years there will be more access to technology platforms and tools through which they can execute their investment strategies. important than access to a human being for help. This reflects a steady shift in sentiment across 12 of the 15 markets surveyed and resonates strongest in India (90%) and the United Arab Emirates (84%).
- Two-thirds of institutional investors say they are now invested in cryptocurrencies. Globally, 32% of retail investors invest in cryptocurrencies, with India leading with 67%, 66% in the United Arab Emirates and 58% in Brazil. Overall, less than half of retail investors trust cryptocurrencies to hold their value (42%), compared to 84% of institutional investors, reflecting the different levels of crypto usage by these two groups .
- Advised investors are also more interested in personalized products (82%). Direct indexing (cited by 56%), personalized impact funds (53%) and AI-based investments (44%) are of most interest to retail investors with advisors.
- Most institutional investors and most retail investors say technology boosts their trust in their asset manager or advisor – due to greater transparency, easier access to markets and products, and customization.
- Globally, 84% of institutional investors would invest in a fund that primarily uses artificial intelligence to select investments, with a similar proportion (78%) believing that the use of AI in investment decision-making investment will lead to better results for investors. A smaller proportion of retail investors (39%) would consider AI-focused funds.