Investment firms deploying new tech are the most trusted among investors
Investment firms that are deploying new technology are the most trusted by both institutional and retail investors, according to new research.
Nearly two-thirds of institutional investors and nearly half of retail investors with an adviser trust their investment firm because of an increased use of technology.
There is growing interest in the use of artificial intelligence (AI) among investors. A strong majority of institutional investors (71 per cent) are eager to invest in funds that employ AI in the investment process.
Figures from the CFA Institute’s trust survey show that, while technology helps investment firms, advice is still primarily the domain of humans. When retail investors were asked about whether they’re more likely to trust a human adviser or a robo-adviser for investment recommendations, 73 per cent still prefer human advice.
However, robo-advisers have attracted clients with lower asset levels and less complex needs. They have also added options for human interaction, as they recognise investors want accountability in advisory relationships.
The UK is also more sceptical of AI compared with investors worldwide. Just 30 per cent of investors are likely to consider using it to make investors. This compares to 36 per cent of investors globally.
The investors who trust the financial system more are more likely to be early adopters of innovative products and technology. Fifty two per cent of these investors said they’d be interested in investing in a new product created by a financial institution. The other investors said they were interested in a large technology firm like Amazon, Google or Alibaba.
The findings are consistent with the relatively high level of trust institutional investors have in the technology industry, and it indicates further opportunity for large technology firms to enter the investment space.
Technology is the most trusted sector among investors
Technology is the most trusted industry among institutional investors, although all trust it less than in 2018.
The financial services industry ranks in the middle tier of trust – 65 per cent of institutional investors trust the industry and 57 per cent of retail investors with an adviser do. This compares to just 33 per cent of retail investors without an adviser.
Within the financial industry, those with a financial adviser are more than twice as likely to trust investment professionals and firms than those without an adviser.
Thirty five per cent of retail investors and 25 per cent of institutional investors say their investment firm always puts their interests first.
Margaret Franklin, chief executive of the CFA Institute, said: “In this climate, the need for trust in institutions and in the advisers who act on behalf of investors, as well as the financial system in which they operate, becomes starkly apparent.”