Its report The Value of The Investment Profession polled the views of key individuals and teams at investment firms, including Neil Woodford and Aberdeen AM’s Martin Gilbert and Anne Richards. The CFA also spoke with consulting firms, clients as well as academics and policymakers.
The research found that the biggest disparities between what an investor expects and what they receive relate to fees and performance.
While most (54%) believe that clients hold the profession in fairly high regard (scoring 7 or more on a scale of 10), few believe that the profession is held in high regard by society, with just 16% expecting that the profession would be given a score of 7 or more out of 10 by society more broadly.
Paul Smith, CFA Institute president and CEO, said: “The things which are important to clients can be replicated time after time: trustworthiness, communication, and transparency. If asset managers get the basics right, they will likely be rewarded with loyal clients.
“Performance needs to be defensible but is not the defining factor. Four out of five retail investors call for more clarity around fees and institutional investors ascribe the greatest importance to fee transparency and ethical behaviour from of a 25-strong list of factors.”
Woodford, who this month cut research costs on his CF Woodford Equity Income Fund, had his own say in the report, stressing the industry is not doing well enough to engage with investors.
“Part of the reason that we don’t do well enough is because of the complexity that has been laid on to that quite simple function of taking savings and investing them on behalf of people,” he said.
“All of those involved in the process have added layers of complexity to fee structures that have diluted returns that should find their way back to the providers of capital.”
He added: “Our industry has been extremely adept at creating a mystery. What we would like to move to is a system where the difference between the gross and net return for the investor is the amount we charge for doing the job we do.”