Investments

Hong Kong's retail investors don't trust their advisers

Only 7% of Hong Kong's retail investors believe their advisers always put clients’ interests first.

Only 7% of Hong Kong's retail investors believe their advisers always put clients’ interests first, according to a survey conducted by the CFA Institute. 

This was the lowest out of all surveyed markets and compares to 30% of Asia Pacific investors and 35% of global investors.

According to the 12-market survey, only 18% of Hong Kong retail investors responded that their advisers rarely or never put their clients’ interests first.

This, though, was four times the averages for both Asia Pacific (4%) and global (4%) respondents.

Curiously, Hong Kong retail investors also rated the ability to achieve high returns (31%) ahead of trust (29%). 

Additionally, they also cited underperformance (63%, again the highest of all global markets) as the primary reason they would considering ditching an adviser.

This was followed by lack of communication (33%), and insufficient technology for their needs (25%).

Also in Hong Kong, respondents rated the three essential criteria in creating a trusted relationship with an investment adviser—track record (68%), fees that reflect the value investors get from the relationship (67%), and the brand of the investment firm (57%).

Given the ever-changing geopolitical and economic landscape, 47% of Hong Kong retail investors expect a financial crisis in the next three years compared to 38% of Asia Pacific investors and 38% of global investors.

On the question of technology, 31% of Hong Kong retail investors say that they are more likely to trust advice from a human adviser over a robo-adviser.

But about 56% of respondents view recommendations from humans and robo-advisers as equal, the highest of all markets.

And 57% of Hong Kong retail investors said that in three years it would be more vital for them to have technological tools to execute their own strategy rather than a person have it do it for them.

Also,  29% of Hong Kong retail investors say that the increased use of technology has also increased their trust in their financial advisers, they are nervous about data security. 

For Hong Kong investors, data security is the most crucial factor in building trust with an investment adviser—82% say that having reliable security measures to protect their data is even more important than performance and disclosures.
 
The survey was conducted by the CFA Institute in collaboration with Greenwich Associates across 3,127 retail investors and 829 institutional investors from Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Singapore, United Arab Emirates, United Kingdom and the United States in end-2017. 

Retail investors surveyed were 25 years or older with investible assets of at least USD100,000, while institutional investors surveyed were those responsible for investment decisions at entities with at least USD50 million in assets under management.