UAE are among the world’s best markets with the highest confidence

CFA Institute, the global association of investment professionals, recently published Enhancing Investors’ Trust – the 2022 CFA Institute Investor Trust Study the fifth in its biennial series, which measures confidence levels and examines the factors driving confidence in financial services among retail and institutional investors in 15 markets worldwide. The survey shows that confidence in financial services has reached an all-time high.

The research reveals five factors that increase trust in financial services: strong market performance, fee compression, technology-enabled transparency, better access to markets and new personalized products. The study identifies increased use of technology as a key confidence factor, simplifying investing by improving access to markets and information. Half of retail investors and more than four-fifths of institutional investors say increased use of technology has increased confidence in their advisor or asset manager, respectively.

The research also shows that personalization contributes to trust, and that advisors who personally understand their clients or offer investment products that align with clients’ values ​​and beliefs can deliver the most value.

William Tohme, CFA, Senior Regional Head, Middle East, and North Africa at ‎CFA Institute said: “As one of the countries with the highest confidence in financial services globally, the UAE’s path to a resilient and diversified economy is characterized by efforts to maintain the stability and integrity of the financial system.

The increase in confidence we are currently witnessing is a positive indicator, and our latest report, Enhancing Investors’ Trust, shows how several factors have helped maintain and build investor confidence, involving technology, value matching and personal connections emerge as key determinants in a new, more resilient dynamic.

The millennium investor segment favors technology and customization and shows relatively high confidence in enterprises such as robotics advice, digital apps, investment alerts and digital nudges for seamless strategy execution. However, the face-to-face advice remains a preference of three quarters of investors, underscoring the importance of the human element – ​​a concept that has remained consistent since 2020.”

Key findings

  • The share of institutional investors with high or very high confidence in financial services has risen to 86% (65% in the previous survey). Among retail investors, the confidence level is up to 60% (previously 46%).
  • Confidence in financial services has reached an all-time high, with India leading the market with the highest confidence level at 87%, the United Arab Emirates in second place with 78% and China in third place with 76%.
  • Millennial retail investors — especially those ages 25 to 34 — have the most confidence in financial services (72% of this cohort have high or very high confidence).
  • For the first time, most retail investors worldwide (56%) believe that in the next three years, access to technology platforms and tools to execute their investment strategies will be more important than access to a human for help. This reflects a steady shift in sentiment in 12 of the 15 markets surveyed, and is loudest in India (90%) and the United Arab Emirates (84%).
  • Two-thirds of institutional investors now say they are invested in cryptocurrencies. Globally, 32% of retail investors invest in cryptocurrencies, India leads with 67%, 66% in the United Arab Emirates and 58% in Brazil. Overall, less than half of retail investors rely on cryptocurrencies to maintain their value (42%), compared to 84% of institutional investors, consistent with the different levels of crypto usage by these two groups.
  • Advised investors are also more interested in personalized products (82%). Direct indexing (cited by 56%), personalized impact funds (53%) and artificial intelligence-based investments (44%), are of most interest to retail investors with advisors.
  • Most institutional investors and most retail investors say technology increases their trust in their asset manager or advisor – thanks to increased transparency, simplified access to markets and products, and personalization.
  • Globally, 84% of institutional investors would invest in a fund that primarily uses artificial intelligence to select investment holdings, and a similar percentage (78%) believe that using AI in making investment decisions will lead to better investor outcomes. A smaller proportion of retail investors (39%) would consider AI-driven funds.

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