The most important attribute in working with an investment firm, according to retail investors globally, is full disclosure of fees and other costs, which was cited by 80% of respondents.
Tied for second were reliable security measures and communication — specifically “clear explanation of all fees and costs before they are charged”. Both were cited by 79% of respondents.
CFA noted that these issues were even more important than protecting a portfolio from losses (73%).
“The MPF core fund initiative and the trends of pension funds moving from active to passive mode may have spurred investors to pay more attention to investment costs,” said Ashley Khoo, president of the Hong Kong Society of Financial Analysts, a member society of CFA Institute in Hong Kong.
“Performance is no longer the only ‘deal breaker’ for investors. They are continuing to demand greater clarity and better service from investment professionals.”
Transparency is therefore a key factor in keeping clients, the report said.
Fees are particularly important to Hong Kong retail investors. The survey found that 58% of retail investors see investment costs as the most important attribute in working with investment firms. By comparison, 55% viewed performance as most important and only 35% think the firm’s reputation is most important.
The survey was conducted globally and involved 3300 retail investors with investible assets of at least $100,000 and 500 institutional investors with assets of $10m or more.
“The study shows that the bar for investment management professionals has never been higher, and that investors no longer solely demand performance, but also want enhanced communication and transparency from their money managers,” Khoo said.
Trust levels
Among the findings in Asia, Hong Kong retail investors’ trust in investment firms dropped to 64% from 69% in 2013, while retail investors in emerging markets such as India and China show the highest level of trust with 90% and 89%, respectively.
Sentiment toward roboadvisers hasn’t displaced the desire for human wealth managers.
Over the next three years, 60% of Hong Kong retail investors prefer having a person to navigate and execute their investment strategy. Only 40% had a preference for a roboadviser.
Data protection was also important. About 45% of institutional investors and 43% of retail investors said they would leave an investment firm if data security were to be compromised, the survey found.
