What does 'transparency' mean in investment practices?

Transparency in investment practices refers to the importance of providing clients with clear and comprehensive information about their investments. This includes details about potential risks, costs, and the rationale behind investment strategies. When financial advisors maintain transparency, they build trust with their clients, enabling them to make informed decisions. Clear communication also helps to manage client expectations and enhances the overall relationship between clients and advisors.

The definition of transparency is rooted in the principle that clients should have access to pertinent information that can affect their investment outcomes. This openness allows clients to understand the complexities of their investments, leading to stronger engagement and better financial decision-making. By prioritizing transparency, investment professionals exemplify ethical conduct in their practices, fostering an environment of accountability and integrity.