Institutional investors more trusting of financial services than retail investors: survey

Global institutional investors are more trusting of the financial services sector than their retail counterparts, according to a new survey by the CFA Institute.

The survey, which polled more than 800 institutional investors and about 3,000 retail investors, also found institutions are more trusting of every industry in which they might invest.

The majority (85 per cent) of institutional investors ranked technology as the most trusted industry, followed by food and beverage (74 per cent) and financial services (72 per cent). Slightly fewer (71 per cent) respondents ranked automotive, telecommunications, law and energy as trustworthy, while the least trusted industries were entertainment (64 per cent), government (60 per cent) and media (53 per cent).

Read: To shop or drop: Retail investing in the wake of Sears’ demise

Within sub-sectors, the survey found 70 per cent of institutional investors trust investment management firms, though the level of trust varies depending on the area, with real estate trusted the most (74 per cent) and hedge funds trusted the least (59 per cent).

The survey also asked how the financial services industry can strengthen the trust of institutional investors. The top response, at 82 per cent, was reliable security measures to protect data.

Other important issues included fully disclosing fees and other costs (79 per cent); acting in an ethical manner in all interactions (79 per cent); taking time to understand the organization’s priorities, liability structure and political dynamics with different stakeholders (79 per cent); generating returns similar to or better than a targeted benchmark (78 per cent); and employing investment professionals with credentials from respected industry organizations (78 per cent).

Read: Global institutional investors favoured real estate, private equity in 2017: survey