Just a third of Hongkongers trust financial advisers, survey finds
Only 35 per cent of Hong Kong investors completely trust the financial services industry, making them the most sceptical in Asia, according to a survey by the CFA Institute.
Furthermore, only 7 per cent of respondents believe that financial advisers always put clients’ interests first – the smallest proportion out of all markets surveyed, and far lower than the 35 per cent global average.
“Hongkongers feel that they are the last group of people whom their advisers would put first,” said Nick Pollard, Asia-Pacific managing director of the CFA Institute, a global association of finance professionals. “So there’s clearly a big gap between their expectations and what they feel is being delivered at the moment.”
The survey was completed by 3,000 retail investors in 12 markets worldwide.
The financial services industry’s trust score has got progressively worse among Hong Kong investors during the three years the survey has been conducted, Pollard noted.
The major concern raised by Hong Kong investors in the survey was financial advisers’ lack of transparency regarding fees and communication.
But Hong Kong was not the only region in the world where investors lacked confidence in their financial advisers. Only 31 per cent of investors in the UK and Australia trusted the industry, while Germany scored just 24 per cent.
However, Hong Kong’s neighbours China and Singapore scored significantly higher in the survey, at 70 per cent and 47 per cent respectively.
Pollard believes China’s higher level of trust is partly because it is a much younger market where ambitious investors are willing to embrace the possibilities of financial technology, while Singapore places more emphasis on giving financial services professionals more training so they can perform more competently.
To restore local investors’ trust in the financial services industry, Pollard recommended that advisers prioritise clients’ needs and maintain transparency in all communications.
“I think organisations who listen to what the market is saying, and instil those values and beliefs within their own advisers, are going to have a competitive advantage over those who don’t take it as seriously,” said Pollard.
But Sally Wong, chief executive of the Hong Kong Investment Funds Association (HKIFA), countered that the financial services industry and regulators place a great deal of importance on transparency and fee disclosure.
“Based on our focus group surveys, we find that investors typically find the [fee] disclosure materials too overwhelming and voluminous. The perennial challenge is how to make the materials user-friendly and digestible,” said Wong.
She also pointed out that the Securities and Futures Commission, an independent regulator of Hong Kong’s financial markets, announced in November new requirements for asset management firms to disclose trailer fees.
“We believe that it will be an important means to further enhance transparency, and address the issue of conflict of interest.”