Poll reveals trust trumps performance in investor-advisor relationships

A new survey suggests that when it comes to selecting and staying with an advisor, investors aren't likely to decide based on their portfolio performance.

Instead, the findings from the poll by CapIntel, a fintech company that provides investment comparison tools, reveal that trust matters even more than portfolio performance.

In the survey of 1,000 US investors it conducted late last year, 72 percent identified trust as the most critical factor when choosing an advisor, beating out their investment experience (50 percent) and the ability to provide a holistic financial perspective (46 percent).

“We’ve always operated with an informed hypothesis that trust is central to an advisor-client connection,” James Rockwood, founder and CEO of CapIntel, said in a statement revealing the findings. “We have also long believed that establishing trust may be more nuanced than many advisors think. We wanted to test our theory by asking investors directly.”

The survey found breaches of trust are the leading reason investors cut ties with advisors, with 61 percent citing it as a primary factor. That puts it above poor investment performance, which was flagged by 54 percent of respondents.

Investors emphasized the importance of various trust-building elements, such as understanding a client’s financial goals (46 percent) and providing accurate and clear financial updates (46 percent). The results also suggest advisors have yet to meet their clients' expectations, as just 62 percent of investors rated their advisor as “excellent” in areas such as clear communication, personalization, and organized advice.

In line with those findings, 85 percent of investors saying they want a straightforward explanation of their financial picture. Similarly, 82 percent said they value advice that's presented clearly and in an organized manner, while another 80 percent said they expect advice that's personalized to their specific financial circumstances.

“This survey helped confirm our assumptions about what investors are seeking from their advisors, but it has also highlighted opportunities as an industry,” Rockwood said. “As we embark on a new year, how will advisors address the disparity between what investors expect and what they deliver?”

Going across demographic lines, the survey also showed nuances in client communication. Millennials were more likely to communicate digitally with their advisors (73 percent) compared to Gen X and Boomer respondents (65 percent and 53 percent, respectively). Gen Y investors also have higher standards when it comes to advisors' tech savvy, with 17 percent saying it's a top quality compared to just 7 percent of Gen Xers and 5 percent of the Boomer cohort.