Mumbai: A survey from the CFA Institute, a global association of investment professionals, suggests that 71% of Indian investors trust the financial services industry, compared to 44% globally and 49% in the Asia Pacific region.
The survey titled 'The Next Generation of Trust: A Global Survey on the State of Investor Trust' also finds some damning revelations. For starters the survey says that 56% Indian investors believed a financial crisis was in the making. This crisis could hit markets in the coming three years.
The study, which was done by CFA Institute in collaboration with Greenwich Associates, gathered responses from 3,127 retail investors and 829 institutional investors from India, China, France, Germany, Singapore, the United Arab Emirates, United Kingdom, United States and other countries.
Confidence of the Indian investors was 30% lower than the global average. A section of them remained majorly concerned on data and confidentiality breaches. 41% of investors suggested they would consider changing from their current investment firms as a major recourse.
The other observations from the survey are as follows:
- 92% domestic investors trust the financial system and capital markets. They believe they have a fair opportunity to profit.
- Both Indians and global investors, believed that hiring a financial adviser was the most important decision.
- Close to 45% Indian retail investors opined their financial adviser always put investors needs first.
- A growing concern among Indian investors who said they have already left or would consider leaving investment firms as a result of a data or confidentiality breach (41%), underperformance (39%), and lack of communication (37%).
- Investors surveyed in India said that their trust in advisers was driven by those with reliable security measures to protect data (83% importance), and those who provide easy-to-understand investment reports (82%).
- Around 81% of domestic investors said they would employ investment professionals with credentials from respected industry organisations.
- Close to 79% of Indian investors will prefer engaging with investment professionals who can help generate returns better, fully disclose fees and other costs (78%), charge fees that reflect the value received from the relationship (77%), and disclose and manage any conflicts of interest (72%).
One among the salient features of the report was the finding that a financial crisis was looming large. The findings revealed 56% Indian investors believe that there could be another financial crisis in the next three years, the highest number globally, with the likely next source being national/global politics (46%), governments defaulting on debt (34%), cryptocurrency bubble (31%), and cyber attack (28%).
"However, 83% of Indian investors believe their advisers are well or very well prepared to manage their portfolio through a financial crisis, as compared to 55% of investors globally," the survey note read.
Vidhu Shekhar, the head of CFA Institute India said, "Trust plays a vital role in the world of finance and has consistently been the greatest determinant in selecting a financial adviser. If only one-third of global investors and less than half of Indian investors believe their adviser always puts investors interests first, it is a challenge for our industry to earn back their trust."
"With 87% of Indian respondents under the age of 45 years, all advisers need to do is to demonstrate a strong commitment to ethics, expertise, and transparency," Shekhar said.(Along with agency inputs)