It's a Question of Trust

The CFA institute (Chartered Financial Analysts) was founded in 1947 to further professional standards in the investment management and advisory community. The institute recently concluded the Global Investors Survey in partnership with Edelman. The study examines trust by investors in investment managers, and explores what dimensions influence that level of trust.

Frederick Lebel a Governor of the CFA and  Hedge Fund specialist from  Switzerland presented the findings at the recent FT International Finance Centres Global Series 2013. The high level executive summary was that:

Frederick Lebel a Governor of the CFA and Hedge Fund specialist from Switzerland presented the findings at the recent FT International Finance Centres Global Series 2013

 

Is it surprising five years into the financial crisis that only one in two trust the financial services industry? Perhaps not but it is not a situation the global investment and advisory community can accept.

It can and must improve public trust and engagement. The CFA website is worth a look in this respect. The chart below illustrates how the crisis has affected attitudes in different regions around the world, with trust and confidence recovering faster in the US and Asia.

 

The CFA website

 

The CFA response to the high level findings is summarised in this statement of investor rights:

 

WHEN ENGAGING THE SERVICES OF FINANCIAL PROFESSIONALS AND ORGANIZATIONS, I HAVE THE RIGHT TO...

 

1. Honest, competent, and ethical conduct that complies with applicable law;

2. Independent and objective advice and assistance based on informed analysis, prudent judgment, and diligent effort;

3. My financial interests taking precedence over those of the professional and

the organization;

4. Fair treatment with respect to other clients;

5. Disclosure of any existing or potential conflicts of interest in providing products or services to me;

6. Understanding of my circumstances, so that any advice provided is suitable and based on my financial objectives and constraints;

7. Clear, accurate, complete and timely communications that use plain language and are presented in a format that conveys the information effectively;

8. An explanation of all fees and costs charged to me, and information showing these expenses to be fair and reasonable;

9. Confidentiality of my information;

10. Appropriate and complete records to support the work done on my behalf.

 

Trust and transparency are key attributes of any healthy and enduring relationship, this is just as true of financial advice, as it is in any other aspect of life. I would commend this work to all in our industry as worthy of support.

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