Many retirement accounts that took a hit in the Great Recession are back on track, but those dark days left a lingering, hard-to-erase legacy: an erosion of the trust that investors had placed in their financial advisors.
The problem – aggravated by scandals involving rogue trading, rate manipulation and insider trading – crops up every time there’s a financial meltdown. This time, it appears especially pronounced among middle and lower-income workers who tell surveyors they simply do not believe their financial advisors are working with their best interest in mind.
The bottom line, according to Robert Stammers, director of investor education for the CFA Institute, is that advisors need to work hard to build trust as a business competency.
Rules and regulations
Fee disclosure rules were put into place last year requiring defined contribution plan providers to be more transparent to their plan sponsor clients about the fees they charge. Plan sponsors now also are required to inform plan participants about the fees they are being charged within their retirement accounts.