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Investment professionals disconnected from client goals: report

Investment professionals disconnected from client goals: report

UK investment professionals could be losing sight of their clients' interests because of a focus on short-term outperformance exacerbated by industry bonus structures, a report has suggested.

The research, from the CFA Institute and the Center for Applied Research, an independent think-tank of State Street, warned a "disconnect" had developed between investment specialists' professional motivations and the purpose of helping clients.

Just 28 per cent of respondents to the research said they remained in the investment management industry in order to help clients achieve financial goals.

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Suzanne Duncan, global head of the Center for Applied Research, said: “When investment professionals are asked to deliver against inappropriate metrics on an inappropriate time horizon, their passion for markets eventually becomes divorced from their true purpose – achieving the long-term goals of the investors they serve.”

This appears to have fed into perceptions of the industry. According to the research, less than one third of retail investors attributed the success of their long term financial planning to a financial adviser or other investment provider, while 55 per cent credited themselves and 38 per cent attributed this success to friends and family.

The perception of the UK industry appeared particularly bleak among investors.

UK retail investors were more pessimistic towards financial professionals than their European peers, with 40 per cent blaming government and regulation for the challenges that they face when planning for their long-term financial goals, compared with 23 per cent in France and 6 per cent in Germany.

More than double the number of UK retail investors than the global average said financial institutions were "most likely to offer products and services in the firm’s own interests”.