New Study Shows Investors Question Performance Data From Advisors and 401k Plan Providers

Marketing Weekly News

By a News Reporter-Staff News Editor at Marketing Weekly News -- Four in 10 investors (41%) either aren't provided, or don't know if they are provided, with core information about investment performance from their investment advisor, 401(k) plan provider and other financial firms, according to groundbreaking new research by the financial research firm Phoenix Marketing International. Moreover, more than one in three investors (35%) aren't entirely confident the information they receive is accurate and reliable.

In its report, The State of Investor Trust &Transparency, Phoenix takes an in-depth look at the breadth and importance of investment information currently provided to investors and how well the financial services industry is using performance reporting to reinforce trust and confidence. A nationwide survey of 2,626 individual investors reveals significant gaps in reporting effectiveness, despite an explosion of technology enhancements that give investors robust information and online access to consolidated and customizable views of portfolios holdings.

"Real transparency isn't simply throwing more data at investors. It's about providing investors with relevant, reliable and straightforward information about investment performance and progress toward goals, with an understanding of how they prioritize that information," said David Thompson, managing director, Financial Services Affluent Practice, at Phoenix Marketing International. "At its core, the relationship between investors and investment advisors is based on trust. Transparent reporting may be the best tool advisors have to earn that trust, differentiate themselves and demonstrate their value."

A key finding of the study is that some investors perceive an inherent conflict of interest with investment advisors as the source of performance reports. This was the case across the discretionary advice spectrum, from automated robo advisory platforms to full service wealth management, and regardless of a fiduciary standard or not. A nagging question on investors' minds is whether disclosures and the presentation of performance measures change depending on results and if third-party validation would show a different outcome.

"Through the eyes of some investors, a performance report crafted by an advisor or firm overseeing the investments is like a school report card written by the student," added Thompson. "Confidence not only in the data and how it is presented but also who it comes from affects investor behavior and is a perception financial firms will want to address."