Study Finds Trust Gap in Investment Performance Reports

A strong plurality of investors say they aren’t provided – or don’t know if they are provided – investment performance information from their advisor. Not that they trust that information, according to a new report.

Four in 10 investors (41%) either aren’t provided, or don’t know if they are provided, with core information about investment performance from their investment advisor, 401(k) plan provider and other financial firms, according to new research by the financial research firm Phoenix Marketing International. Moreover, more than one in three investors (35%) – and here we’re talking about people with $100,000 or more in investable assets – aren’t entirely confident the information they receive is accurate and reliable.

The report, based on a nationwide survey of 2,626 individual investors, cites as a key finding that some investors perceive an inherent conflict of interest with investment advisors as the source of performance reports. According to a blog post by the firm, this was the case across the discretionary advice spectrum, from automated robo advisory platforms to full service wealth management, and regardless of a fiduciary standard or not. A nagging question on investors’ minds, according to the report, is whether disclosures and the presentation of performance measures change depending on results and if third-party validation would show a different outcome.

The complete “State of Investor Transparency” study, including detailed analyses of the findings and recommendations for advisors and other financial professionals, can be purchased (for just under $10,000) here.

The online questionnaires that comprised the study were completed by 2,626 respondents with a minimum of $100,000 in investable assets. Interviews were conducted in October and December 2016. All data were weighted to by age, income and investable assets to reflect the true distribution of affluent households nationally.

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