Sun, Jan 25, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Cerulli: Investors have more trust in advisors than in financial firms

Thursday, January 31, 2013
Opalesque Industry Update - According to The Cerulli Edge - Advisor Edition, 1Q Issue from Boston-based global analytics firm Cerulli Associates, investors have more trust in advisors than in financial firms overall.

"In both 2008 and 2012, only 28% of households indicated they believed financial firms regularly considered investors' best interests when presenting products and service options," explains Scott Smith, director at Cerulli Associates. "During the same period, the investors who indicated they believe firms do not look out for their best interest rose from 37% in 2008 to a peak of 41% in 2010."

The most recent issue of The Cerulli Edge - Advisor Edition reviews the key trends, opportunities, and challenges for advisors and their distribution partners in the coming years.

"While firms have managed to build trust back to pre-crisis levels, the more disconcerting fact is that less than 30% of investors believe their interests come first at the firm level," Smith continues. "Fortunately, investors have a higher level of expectation when it comes to the individuals handling their accounts. Two-thirds of investor respondents indicated that the advisor assigned to their account must put client interest first at all times, which results in a significant gap in trust between what investors believe about advisors and their firms."

Cerulli's research finds that investors expect that their advisors are obligated to put their interests first, but this is not currently the case for most investors. Those investors with investment advisory relationships are assured their advisor is operating under a fiduciary standard and must put client interests first.

"Investors who hold brokerage accounts are assured of a suitability standard of care through their registered representative. This essentially means that investments offered to the client must be consistent with their best interests, but not necessarily the best option available," explains Smith.

Cerulli finds that deepening client trust is essential for firms that want to maximize the value of their client relationships. Only by truly aligning their business models with investors' interests and expectations will firms be able to increase their addressable opportunities. Cerulli believes that firms that fully embrace and promote their roles as fiduciary providers are most likely to increase their opportunities among retail investors.

Press release

These findings and more are from The Cerulli Edge - Advisor Edition, 1Q 2013 issue .

CLICK HERE to request a press copy of this research.

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Commodities - Druckenmiller alums at PointState make $1 billion on oil, Andurand Capital sees oil sliding to $40[more]

    Druckenmiller alums at PointState make $1 billion on oil From Bloomberg.com: Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction. “We believe crude oil is going lower -- much lower,” Schreiber, 42, told the audienc

  2. Investing - David Einhorn discloses a new position in Time Warner, Canyon trimming bets on mortgage bonds after making $7bn[more]

    David Einhorn discloses a new position in Time Warner From FTLeavenworthlamp.com: …Einhorn also disclosed a new position in Time Warner. "Since 2009, TWX has refocused its business into a collection of high quality assets including basic cable networks (Turner and CNN), a movie studio (

  3. Top performing private equity firms you should invest in[more]

    Komfie Manalo, Opalesque Asia: Professor Oliver Gottschalg of Paris-based HEC Business School, also known as Ecole des Hautes Etudes Commerciales de Paris has released his annual ranking of the top performing private equity firms. The 2014 HEC-DowJones Private Equity Performance Ranking

  4. Comment - Why invest in hedge funds if they don't outperform the market?[more]

    From Forbes.com: Hedge funds have always been a bit exotic and an enigma to some, but bottom line they are supposed to produce good returns using a range of strategies including global macro, event driven and relative value (arbitrage). And, sophisticated or high-net-worth individuals (HNWIs) could

  5. Owen Li 'truly sorry' for blowing up $100m of hedge fund’s assets[more]

    From CNBC.com: A hedge fund manager told clients he is "truly sorry" for losing virtually all their money. Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. "I take r