Despite the trauma of the financial crisis -- or perhaps because of it -- Investors say they trust their financial adviser more than their doctor or accountant.
In a survey of investors with at least $200,000 in assets, 84% said they strongly trusted their financial adviser. By comparison, 79% said they strongly trusted the doctor, and 74% indicated they had great faith in their accountant.
Survey responses suggested that trust probably has something to do with how their advisers performed through the rough market of the last several years
“Maybe it is because investors have been to hell and back with their adviser and survived, and that strengthened the bond,” said David Longfritz, chief marketing officer for John Hancock Financial. John Hancock, a unit of Manulife Financial Corp., conducted the April telephone survey of 1,005 adults. “It has been a catastrophic event they went through together,” he said.
In the survey, investors were asked what advice their adviser gave them during the market crash of 2008-09. The advisers came through in flying colors, which may help explain why investors are so trusting today, Mr. Longfritz said.
Nearly two-thirds (62%) said their advisers told them to stay invested in the market, the route that proved to be the wisest. Another 20% said they received similar advice, but were advised to liquidate some of their holdings. Only 2% said their advisers told them to liquidate their entire investment portfolio.
“If left to their own devices, most investors probably would have sold out,” he said.
Asked what won their trust, the biggest vote getters were that their adviser clearly explained their investment recommendations. More than half of the respondents said their advisers were knowledgeable about products and trends. About the same percentage said fee transparency was a very important factor, following 49%, who cited quick answers to questions.
Advisers may be surprised by what doesn't make a difference. Only 21% said a referral from friends or family was one of the most important factors in determining whether to trust an adviser, and only 16% said it was user-friendly tools and calculators. Local community involvement was the least cited, with only 5% saying it was an important factor.
Investors said they lost trust in an adviser who was difficult to contact or unresponsive (25%), gave bad investment advice (13%), or lacked a personalized approach (12%).