Indian retail investors rank highest for trust in cryptocurrencies, revealed CFA Institute’s ‘Enhancing Investors’ Trust’ – the 2022 CFA Institute Investor Trust Study. India is also ranked as one of the top markets for trust in financial services. The study identifies five factors – strong market performance, fee compression, tech-enabled transparency, greater access to markets, and new personalized products – that are major determinants of trust globally.
“Indian retail investors rank highest (67%) for trust in cryptocurrencies,” as per the study. However, unlike retail investors, “institutions are behind as more than half of them do not yet provide crypto-related investment resources,” pointed out the study.
Among retail investors in India, the trust in financial services has come down compared to the previous study. “Trust (of Indian retail investors) is at 83% as compared to 87% previously. This still makes India one of the top markets for trust in financial services.”
When it comes to investment advisory, the study added that “88% of Indians opt for a trusted brand to work with when choosing their investment advisor, which reiterates the need for relationship building and reputation.”
Further, “a majority of Indians (73%) believe in recommendations from a human adviser as compared to robo-advisers. This shows the importance of human intervention in the field of financial investments,” the study mentioned.
Arati Porwal, Director Society Relations, CFA Institute, in India said “This is our 10th year conducting this study that provides the industry valuable insights into the changing landscape of investor relations globally and in India. This year is a landmark as the study calls attention to the state of investor trust amid the pandemic. A critical aspect is that retail and institutional investors are demanding cutting-edge technology for making trustworthy investments. India Inc. is witnessing a digital revolution with 90% of respondents of the opinion that the latest technology and tools are crucial to devise a winning investment strategy. Another interesting finding, particularly for the Indian market, is the high and growing interest in cryptocurrencies, which is a testimony to the country’s young investor profile with a higher risk appetite, readiness in adopting virtual digital assets and a positive outlook.”
“The highs we’re now seeing in investor trust are certainly the cause for optimism, but the challenge is sustaining trust even during periods of volatility. Our ongoing examination of the dynamics required to build and maintain investor trust reveals what investors need from their advisors and managers through the highs and lows of market cycles. Technology, the alignment of values, and personal connections are all coming through as key determinants in a resilient trust dynamic. The under-44s, and particularly the millennials, are leading the way in their use of technology and in their desire for personalized products. This investor cohort has a relatively high trust in robo-advice, digital apps, and digital nudges, and are using online platforms to executive their investment strategies.” added Rebecca Fender, Head of Strategy & Governance for Research, Advocacy and Standards, CFA Institute, and lead author of the Trust Study.
“Our country has set itself an ambitious target of becoming a US$5 trillion economy but, the lack of financial literacy and slow technology adoption can put us off track. Increasing retail investor awareness that will enhance trust in the sector is the only way to grow the sector. The role of financial advisers becomes very crucial at such times as they act as the support system to the retail investors and help in the growth of the industry. As seen in CFA Institute’s Trust Study 2022, more than 50% of retail investors with advisers are willing to try new investment products. The study provides some deep insights like these that can help the sector better understand the rapidly evolving trends and align itself accordingly.” said Rajendra Kalur, Chairperson of CFA Society India.