Indian retail investors rank first for trust in cryptocurrencies, the CFA Institute’s ‘Enhancing Investors’ Trust’ study – the CFA Institute Investor Trust’s 2022 study – has revealed. India is also ranked among the top markets for trust in financial services. The study identifies five factors – strong market performance, fee compression, transparency through technology, better access to markets and new personalized products – that are the main determinants of trust globally.
“Indian retail investors rank first (67%) for trust in cryptocurrencies,” according to the study. However, unlike retail investors, “institutions are lagging behind as more than half of them do not yet provide crypto-related investment resources,” the study pointed out.
Among retail investors in India, confidence in financial services has declined compared to the previous survey. “Confidence (of Indian retail investors) is at 83% compared to 87% previously. This still makes India one of the best markets for trust in financial services.”
When it comes to investment advice, the study added that “88% of Indians choose a trusted brand to work with when choosing their investment advisor, which reiterates the need for relationship building and get a reputation”.
Moreover, “a majority of Indians (73%) believe in the recommendations of a human advisor over robo-advisors. This shows the importance of human intervention in the field of financial investments,” the study mentions. .
Arati Porwal, Director of Corporate Relations, CFA Institute, India, said, “This is the 10th year that we have been conducting this study which provides the industry with valuable insights into the changing landscape of corporate relations. investors globally and in India. This year is a milestone as the study draws attention to the state of investor confidence amid the pandemic. A key aspect is that both retail and institutional investors require advanced technology to make reliable investments. India Inc. is witnessing a digital revolution with 90% of respondents believing that the latest technologies and tools are essential for designing a winning investment strategy. Another interesting finding, especially for the Indian market, is the high and growing interest in cryptocurrencies, which speaks to the country’s young investor profile with higher risk appetite, willingness to adopt virtual numbers and a positive outlook. »
“The highs we are currently seeing in investor confidence are certainly cause for optimism, but the challenge is to maintain confidence even during periods of volatility. Our ongoing examination of the dynamics needed to establish and maintain investor confidence reveals what investors expect from their advisors and managers through the ups and downs of market cycles. Technology, value alignment, and personal relationships all emerge as key determinants in resilient trust dynamics. Those under 44, and particularly millennials, lead in their use of technology and their desire for personalized products. This cohort of investors have relatively high confidence in robo-advice, digital apps and digital nudges, and use online platforms to execute their investment strategies,” added Rebecca Fender, Chief Strategy and of Governance for Research, Advocacy and Standards, CFA Institute, and lead author of the Trust Study.
“Our country has set an ambitious goal of becoming a US$5 trillion economy, but lack of financial literacy and slow adoption of technology can confuse us. Increasing retail investor awareness which will build confidence in the industry is the only way to grow the industry. The role of financial advisors becomes very crucial at such times as they act as a support system for retail investors and contribute to the growth of the industry. As the CFA Institute’s Trust Study 2022 shows, more than 50% of retail investors with advisors are willing to try new investment products. The study provides in-depth insights like this that can help the industry better understand rapidly changing trends and align accordingly,” said Rajendra Kalur, President of CFA Society India.