Australians are less trusting of financial advisers than their global peers according to a survey by the CFA Institute, with damage from the Hayne royal commission still having a lasting effect on industry perception.
Some 56 per cent of global retail investors are trusting of financial advisers while in Australia only 42 per cent are.
The main reasons Australian retail investors leave an adviser are underperformance (51 per cent), followed by a lack of responsiveness (37 per cent), inadequate data security (35 per cent) and high fees (35 per cent).
Fewer than a quarter (23 per cent) of retail investors in Australia stated it’s important to have an adviser who shares their values.
Australians with a financial adviser are more trusting of the financial services industry (58 per cent) compared those without one (39 per cent). However, 69 per cent of advised clients globally trust the financial services industry.
Australian’s trust in the financial services industry has almost doubled in the last two years (45 per cent in 2022 versus 22 per cent in 2020).
CFA Societies Australia chief executive Lisa Carroll said trust jumped significantly since 2020 when the Hayne royal commission eroded confidence in the asset management industry due to the “significant amount” of negative news coverage at the time.
“Looking ahead, as interest rates rise this year and returns fall on asset classes such as equities and property compared to previous years, investment product providers and financial advisers may be more challenged maintaining trust levels with their clients,” she said in a media release.
Younger market prefer tech
Younger investors, particularly millennials, have a higher relative trust of roboadvice, digital apps, and the desire to try new investment opportunities.
More than 70 per cent of millennials prefer technology platforms and tools over having a human being to help navigate their investment strategy, compared with just 30 per cent of those aged 65 or older, the survey found.
Under-35s are nearly twice as likely as the over 65s to have a retail trading account (68 per cent versus 37 per cent) and are nearly three times more likely to trust digital technologies (92 per cent versus 33 per cent).
However, 81 per cent of Australian retail investors regardless of age are more likely to trust human advice versus roboadvice.