CFA Institute, the global association of investment professionals, today published Enhancing Investors’ Trust – the 2022 CFA Institute Investor Trust Study, the fifth in its biennial series, which measures trust levels and explores the factors that drive trust in financial services among retail and institutional investors in 15 markets globally. This study shows that financial services trust has reached an unprecedented high.

This study revealed five key factors that lead to higher financial trust: market performance, price compression, tech-enabled transparentity, increased access and markets, as well as new customized products. Technology is a key trust factor. It simplifies investing and makes it easier to access markets and other information. Over half of retail investors agree with the conclusion that increasing use of technology has led to increased trust in their advisors and asset managers.

The study also finds that personalization is additive to trust, and advisers who understand their clients personally, or provide investment products that align with clients’ personal values and beliefs, can deliver the most value.

Rebecca Fender, CFA, Head of Strategy & Governance for Research, Advocacy and Standards atCFA Institute, and lead author of the Trust Study, comments:

There are many reasons to be optimistic about investor trust. But trust is difficult to sustain even in volatile markets. The dynamics that are required to maintain and build investor trust is being examined by our team. It reveals what investors expect from their advisors, and how they can help them through market downturns. The key components of a strong trust dynamic are technology and the alignment between values. Personal connections also play a significant role.
The under-44s and millennials are the most innovative in technology use and their quest for customized products. The trust of this investor group is high in robo advice, digital apps, and digital nudgings, such as alerts regarding new investment opportunities. Additionally, they use online platforms for executing their investment strategies. These investors are keen to find investment tools that align with their values and preferences, such as sustainability or ESG. Clean energy and climate change are top ESG priorities of retail investors. Institutions are focused more on data protection, privacy, and sustainable supply chains management.
These are the Key Findings

• The number of institutional investors that have high to very high financial trust has increased from 65% in previous surveys to 86%. Retail investors have trust levels of up to 60%, compared with 46 percent previously. Retail investors have become more confident in every market except India. There trust levels dropped from 87% to 83% while India is still the most trusting. Australia, Singapore, the United States and Australia saw the greatest trust increases (i.e. 64%, 62%, 45%, respectively). Germany (37%), is the current lowest-trust market, compared to Australia (39%) Millennial retail investors—and particularly those aged 25 to 34—are the most trusting of financial services (72% of this cohort have high or very high trust).
• Advisors add trust: Nearly twice as many retail investors (58%) have advisers than are investors who don’t have one (37%).
• Personalized products (82%), which are preferred by advisers, are much more appealing to them than standard products (62%), although they will pay an additional fee for customization. Retail investors who have advisers are most interested in direct indexing (56%), personalized impact funds (53%), and AI-driven investments (44%).
• Most institutional investors (87%, up from 66%) and most retail investors (50%, up from 48%) say technology increases their trust in their asset manager or adviser – due to more transparency, simplified access to markets and products, and personalization.
• Generational differences aside, under 35s have twice the likelihood than over 65s that they will open a retail trading account (68%) versus 37% (37%), and almost three times as likely to trust digital pushes (92% versus 33%, respectively). Retail investors believe that the retail trading app has increased their knowledge of investing and increased trading frequency (57%).
• 56 percent of retail investors believe that technology platforms will allow them to execute their strategies more effectively than human assistance. This is the first time this has happened. The sentiment shift is evident in 12 markets, with the strongest resonance in India (90%), and in Dubai (84%). Canadian retail investors prefer execution of tech-led investments to be least preferred (29%).
• Advice remains the realm of human beings. Three-quarters (74%) of retail investors are more likely to trust human advice versus robo-led advice—a level that has remained stable since 2020 (73%). China currently has less than half of all retail investors who prefer to have a personal adviser.
• Globally, 84% of institutional investors would invest in a fund that primarily uses artificial intelligence to select investment holdings, with a similar proportion (78%) believing that use of AI in investment-decision-making will lead to better investor outcomes. However, only 39% would invest in AI-driven funds.
• Two-thirds (63%) of institutional investors claim they have invested in cryptocurrency, with the largest number of holders being government-sponsored pension plans (94%). Globally, 32% of retail investors invest in cryptocurrencies—ranging from 67% of surveyed investors in India, to 7% in Canada. Because of the differences in crypto usage, less than half of all retail investors believe cryptocurrencies will hold their value (42%) versus 84% of institutional investors (84%).
• All markets have retail investors interested in ESG strategies or using them already (77%). ESG issues of concern vary between institutional and retail investors. Institutional investors are more concerned about climate change and clean energy. Retail investors are most worried about climate change and air pollution. While institutions are focused on data protection and sustainable supply chain management and climate change, they are also interested in ESG topics. Best-in-class screening is the preferred approach for ESG investment. Institutional investors cite it as being more popular than engagement and active ownership. 87% of institutional investors trust ESG messaging, net-zero promises, and ESG messaging. Retail investors, however, trust them less than 50% (46%) which raises concerns about potential greenwashing.
• Globally 40% of retail investors agree that it’s important to work with an advisor who shares their values. China is the country where this sentiment is strongest, with 74% believing shared values to be important. This view is held by less than 25% in Australia and Canada (23 and 18%, respectively).
• In order to build trust with institutional investors, 55% are relying on brands. Even in low-trust countries, it is still important to establish a personal connection with retail investors. In-person meetings are preferred by 54% of global respondents to establish an investor-client relationship from the beginning. According to the survey, nearly all of retail investors worldwide believe that face-to-face interaction with an advisor is important in building trust.
• According to institutions investors, trust has been affected by a shift in factors. Respondents revealed that trust is now being lost because of a shift in the factors that could cause it.

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