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CFA Institute calls for universal disclosure of fees and performance across investment industry


The CFA Institute has produced a roadmap for how the investment industry can increase its credibility and allay investor concerns, including the introduction of universal disclosure of fees and performance.

The CFA Institute believes that by adhering to the core tenets of professionalism – putting clients first, being transparent about fees and performance, demonstrating expertise – advisers will earn the trust of their clients.
The CFA Institute, commissioned a survey to help advisers understand the pivotal role that professionalism plays in building trust in client relationships and in the industry overall. As investor expectations continue to rise, the survey finds that the trust equation of credibility and professionalism will acquire even more importance.
The 12-market survey, The Next Generation of Trust: A Global Survey on the State of Investor Trust, reveals a significant gap between what more than 3,000 retail investors expect from their financial advisers and how satisfied they are with the relationship. Retail investors believe that financial advisers fall short of meeting expectations the most in the areas of transparency and performance. Investors surveyed say that their trust in advisers is driven by priorities of full disclosure of fees (84 per cent importance), disclosure and management of conflicts of interest (80 per cent), and generating returns better than a benchmark (78 per cent), yet respectively, only 48 per cent, 43 per cent, and 44 per cent of participants say that advisers deliver satisfactorily on these.
Among the more than 800 institutional investors surveyed, the factors that were considered to be most important ranked similarly to retail investors. However, the gap between institutional investors’ expectations of and satisfaction with those priorities is much narrower, with less than a 10 percentage point shortfall. Overall, institutional investors surveyed are more satisfied.
“We are pleased that investor trust has increased since 2016. We attribute this to rising levels of professionalism in our industry. CFA charterholders are growing in number around the world and are carrying the message forward: as fiduciaries, as stewards of our clients’ money, we must act in their best interests at all times,” says Paul Smith, CFA, president and CEO of CFA Institute. “But, there is work still to be done,” he added. “Higher trust comes with higher expectations, and we are not there yet until we can consistently prove our value to clients by providing solutions, not simply products. We need universal disclosure of fees and performance to drive home this message.”
One example championed by CFA Institute is the Global Investment Performance Standards (GIPS), a set of industry-wide principles that guide investment firms on how to calculate and report their investment results to prospective clients.

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