Investment clients have low tolerance for mistakes

By Mathieu Carbasse | February 19 2016 01:30PM

Paul Smith

According to a study from the CFA Institute, three out of four clients will leave once they have been given cause to re-evaluate their relationship with an investment manager.

The global survey, From Trust to Loyalty, was published on Feb. 17. It reveals that while 51% would recommend their current firms, the strength of their convictions is weak. "Investors have little tolerance for mistakes," reads the report. "Underperformance, fee increases, a data or security breach or poor communication or responsiveness could signal the end of a client relationship."

Walking away

In Canada, only 17% of retail investors say they trust the financial services industry "a great deal", although another 47% indicate they have some level of trust. But should investors be given some reason to reconsider their trust in an investment manager, the survey shows that most will end up walking away; overall 76% of retail investors and 74% institutional investors are likely to leave within six months of a precipitating event.

Demonstrate your commitment

“The bar for investment management professionals has never been higher,” comments CFA Institute president and CEO Paul Smith. “Retail and institutional investors, as always, crave strong performance, however both groups also demand enhanced communication and guidance from their money managers. Building trust requires truly demonstrating your commitment to clients’ well-being, not empty performance promises or tick-the-box compliance exercises. Effectively doing so will help advance the investment management profession at a time when the public questions its worth and relevance.”

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