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Affluent/Mass Affluent Investing and Banking - Canada - November 2016

“Financial advisors serving the affluent must not only develop a wider range of skills but also understand their attitudinal differences such as those related to risk perception and charitable giving.”
– Sanjay Sharma, Senior Financial Services Analyst

This report examines the following issues:

  • Around one in four millionaires uses a bank affiliated brokerage for investments
  • More than half of the affluent feel they require more than a million dollars for retirement
  • Around one in ten millionaires has invested in hedge funds
  • Affluent may have a different perception of risk

In recent years, there has been tremendous growth in the number of affluent Canadians and a corresponding growth in opportunity for financial institutions. Consequently, there has been a greater effort in the industry to create more effective and profitable approaches to meet the needs of this client base.

Over the past few decades, financial products and markets have grown in sophistication. At the same time, individuals looking at retirement are becoming more reliant on their own investments to supplement government and corporate pension plan benefits. In addition, the need for effective planning in specialized areas (such as ownership of foreign property, insurance solutions, alternative investments, leveraged investing, small business ownership, charitable giving, trusts, etc) is increasing. As a result, many affluent investors now look for guidance from experienced and competent advisors.

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Table of contents

  1. Overview

      • Regional classifications
        • Income
          • Affluent and mass affluent
            • Glossary
            • Executive Summary

                • The issues
                  • Around one in four millionaires uses a bank affiliated brokerage for investments
                    • Figure 1: Type of financial institution used for investments, by affluence, September 2016
                  • More than half of the affluent feel they require more than a million dollars for retirement
                    • Figure 2: Attitudes related to retirement (% any agree), by affluence, September 2016
                  • Around one in ten millionaires has invested in hedge funds
                    • Figure 3: Investment related activities, by affluence, September 2016
                  • Affluent may have a different perception of risk
                    • Figure 4: Attitudes related to investment strategies (any agree %), by affluence, September 2016
                  • The opportunities
                    • Robo-advisors and the mass affluent opportunity
                      • Advisors catering to the affluent require a larger tool-box of skills
                        • Understanding the nuances of charitable giving
                          • What it means
                          • The Market – What You Need to Know

                            • CRM2 and its impact
                              • Canada’s economy still struggles
                                • Robo-advisors
                                • Market Factors

                                  • CRM2 and its impact
                                    • Shift in compensation methods may be a long-term effect of CRM2
                                      • Canada’s economy still struggles
                                        • Robo-advisors
                                        • Key Players – What You Need to Know

                                          • TD and Scotiabank streamline services to high net-worth investors
                                            • BMO targets high-net-worth seniors in new wealth management program
                                              • New bank opens targeting Chinese Canadians
                                                • CIBC offers a digital advice channel
                                                  • Bank of Montreal robo-advisor offers its ETFs
                                                    • Wealthsimple reaches $500 million in assets
                                                    • Industry Developments

                                                      • Wealth Management Services
                                                        • TD and Scotiabank streamline services to high net-worth investors
                                                          • BMO targets high-net-worth seniors in new wealth management program
                                                            • New bank opens targeting Chinese Canadians
                                                              • National Bank opens a private banking wing in Vancouver
                                                                • Robo-advisors
                                                                  • CIBC offers a digital advice channel
                                                                    • Bank of Montreal starts robo-advisor offering its ETFs
                                                                      • Wealthsimple reaches $500 million in assets
                                                                        • Nest Wealth
                                                                          • WealthBar
                                                                            • ModernAdvisor
                                                                              • Innovations from across the border (US examples)
                                                                                • Robinhood-free discount brokerage
                                                                                  • Acorns Grow Inc
                                                                                    • Fidelity Go
                                                                                    • Marketing Campaigns

                                                                                      • Selected Campaigns from Mintel Comperemedia
                                                                                        • Sentry Investments addresses the issue that women may outlive their retirement savings
                                                                                          • Figure 5: Sentry investments print advertisement, September 2016
                                                                                        • Fidelity pitches steady returns
                                                                                          • Figure 6: Fidelity print advertisement, September 2016
                                                                                        • Edward Jones highlights its personalized wealth management service
                                                                                          • Figure 7: Edward Jones online advertisement, September 2016
                                                                                      • The Consumer – What You Need to Know

                                                                                        • Some 6% of Canadians have more than a million in investments
                                                                                          • More than half of Canadians have their investments with a bank
                                                                                            • Men are more proactive with regard to financial planning activities
                                                                                              • Majority of investors favour a conservative approach while the affluent may have a different risk perception
                                                                                                • Green or ethical issues are not particularly important to most investors
                                                                                                  • More than half of the affluent feel they require above a million dollars for retirement
                                                                                                  • Affluence and Product Ownership

                                                                                                    • Some 6% of Canadians have more than a million in investments…
                                                                                                      • Figure 8: Breakdown of affluence (investments excluding pensions), September 2016
                                                                                                    • …and 15% have a net worth of more than a million
                                                                                                      • Figure 9: Breakdown of net worth (including real estate and pensions), September 2016
                                                                                                    • More than half of consumers have a TFSA and/or an RRSP…
                                                                                                      • Figure 10: Product ownership, September 2016
                                                                                                    • …while a third of millionaires own ETFs and around a quarter own investment property
                                                                                                      • Figure 11: Product ownership by those with over a million dollars, September 2016
                                                                                                    • Almost a third of consumers have five or more investment products
                                                                                                      • Figure 12: Repertoire analysis of product ownership, September 2016
                                                                                                  • Investment Advisory Services

                                                                                                    • More than half of Canadians have their investments with a bank
                                                                                                      • Figure 13: Type of financial institution used for investments, September 2016
                                                                                                    • Around one in four millionaires uses a bank affiliated brokerage for investments
                                                                                                      • Figure 14: Type of financial institution used for investments, by affluence, September 2016
                                                                                                    • Trust in independent advisors increases with affluence
                                                                                                      • Figure 15: Attitudes to financial advice, by affluence, September 2016
                                                                                                    • Most investors prefer in-person meetings with an advisor
                                                                                                      • Figure 16: Attitudes about client expectations, September 2016
                                                                                                    • Affluent have clear knowledge of advisor expectations
                                                                                                      • Figure 17: Attitudes about financial advisors, by affluence, September 2016
                                                                                                  • Financial Planning Activities

                                                                                                      • Over a third of Canadians have discussed retirement planning with an advisor
                                                                                                        • Figure 18: Financial planning activities, September 2016
                                                                                                      • Men are more proactive with regard to financial planning activities
                                                                                                        • Figure 19: Financial planning activities, significant differences by gender, September 2016
                                                                                                      • Younger investors more likely to explore hedge funds and off-shore tax planning
                                                                                                        • Figure 20: Financial planning activities (select), by age, September 2016
                                                                                                      • Around one in ten millionaires has invested in hedge funds
                                                                                                        • Figure 21: Investment related activities, by affluence, September 2016
                                                                                                      • Affluent more likely to have sold a business
                                                                                                        • Affluent Canadians are more proactive about using insurance as part of their financial plan
                                                                                                          • Figure 22: Insurance planning, by affluence, September 2016
                                                                                                        • Affluent Canadians also more likely to receive legal advice and explore offshore tax planning
                                                                                                          • Figure 23: Legal, estate and tax planning, by affluence, September 2016
                                                                                                      • Investing Preferences and Strategies

                                                                                                        • Majority of investors favour a conservative approach…
                                                                                                          • Figure 24: Attitudes related to investment strategies, September 2016
                                                                                                        • Around two thirds feel that investing in property is safer than the stock market
                                                                                                          • …while the affluent may have a different perception of risk
                                                                                                            • Figure 25: Attitudes related to investment strategies (% any agree), by affluence, September 2016
                                                                                                          • Green or ethical issues are not particularly important to most investors
                                                                                                            • Figure 26: Attitudes related to investment preferences, (any agree %), September 2016
                                                                                                          • Men and Chinese Canadians more willing to buy investments online
                                                                                                            • Older investors have most of their assets in Canada
                                                                                                              • Older investors more likely to rate home ownership as their best investment
                                                                                                              • Financial Advice

                                                                                                                • Majority believe referrals are the best way to choose a financial advisor
                                                                                                                  • Figure 27: Attitudes related to financial advice, September 2016
                                                                                                                • Higher income more willing to buy investments from their insurance company
                                                                                                                  • Young males more willing to use robo-advisors
                                                                                                                    • Robo-advisors and the mass affluent opportunity
                                                                                                                      • Higher income earners more willing to buy investments from their insurance company
                                                                                                                        • Reliance on a financial advisor is high among the affluent
                                                                                                                          • Men are more aware of investment fees
                                                                                                                            • Figure 28: Attitudes related to financial advice, September 2016
                                                                                                                          • Awareness of fees increases with affluence
                                                                                                                            • Figure 29: Attitudes related to financial advice, by affluence, September 2016
                                                                                                                        • Retirement and Estate Planning

                                                                                                                          • Retirement needs of the affluent significantly more than that of the mass affluent
                                                                                                                            • Figure 30: Attitudes related to retirement (% any agree), September 2016
                                                                                                                          • 45-64s more likely to feel they would use most of their retirement savings
                                                                                                                            • More than half of the affluent feel they require above a million dollars for retirement
                                                                                                                              • Figure 31: Attitudes related to retirement (% any agree), by affluence, September 2016
                                                                                                                            • Advisors catering to the affluent require a larger tool-box of skills
                                                                                                                              • Most Canadians are not very focused on leaving money for charities
                                                                                                                                • Figure 32: Attitudes related to estate planning (% any agree), September 2016
                                                                                                                              • One in five affluent investors is interested in philanthropic giving
                                                                                                                                • Figure 33: Attitudes related to charities (% any agree), by affluence, September 2016
                                                                                                                              • Understanding the nuances of charitable giving
                                                                                                                              • Appendix – Data Sources and Abbreviations

                                                                                                                                • Data sources
                                                                                                                                  • Consumer survey data
                                                                                                                                    • Consumer qualitative research
                                                                                                                                      • Abbreviations and terms

                                                                                                                                      Companies Covered

                                                                                                                                      To learn more about the companies covered in this report please contact us.

                                                                                                                                      Affluent/Mass Affluent Investing and Banking - Canada - November 2016

                                                                                                                                      £3,239.54 (Excl.Tax)