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Wealth Advisory Services - Canada - December 2017

“Old is gold when it comes to wealth with over-65s being the most affluent and having the highest ownership of investments.”
– Sanjay Sharma, Senior Financial Services Analyst

This Report discusses the following key topics:

  • Around half of Canadians have a TFSA and/or an RRSP
  • Around half of investors use a retail bank as their main investment company
  • Most investors not enamoured with passive investing
  • Performance, fees and product offerings are the top reasons for attrition
  • Willingness to use robo-advisors strongly varies by age and gender

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Table of contents

  1. Overview

      • Definition
        • Regional classifications
          • Income
            • Glossary
            • Executive Summary

                • The issues
                  • Around half of Canadians have a TFSA and/or an RRSP
                    • Figure 1: Product ownership, October 2017
                  • Around half of investors use a retail bank as their main investment company
                    • Figure 2: Type of financial institution used for investments, October 2017
                  • Most investors not enamoured with passive investing
                    • Figure 3: Attitudes towards investing (% agree), October 2017
                  • Performance, fees and product offerings are the top reasons for attrition
                    • Figure 4: Reasons for attrition, October 2017
                  • Willingness to use robo-advisors strongly varies by age and gender
                    • Figure 5: Agreement with statement on use of robo-advisors, by age and gender, October 2017
                  • The opportunities
                    • Robo-advisors: immense potential but could be challenges for full-service providers
                      • Around seven in 10 Asian Canadians use banks/bank wealth management subsidiaries
                        • Figure 6: Type of financial institution used for investments (select), Asian Canadians vs overall, October 2017
                      • One in five millionaires use a bank-owned discount brokerage
                        • Figure 7: Type of financial institution used (select), by amount of investments, October 2017
                      • What it means
                      • Market Factors – What You Need to Know

                        • Diminished capacity among seniors is a consequence of an ageing population
                          • Canada will become increasingly diverse
                            • Usage of digital investment tools including robo-advisors is low
                              • Household debt, home prices biggest risk to Canadian economy
                              • Market Factors

                                • Diminished capacity among seniors a consequence of ageing population
                                  • Figure 8: Canadian population, by age, 2016
                                • Canada will become increasingly diverse
                                  • Usage of digital investment tools including robo-advisors is low
                                    • Figure 9: Awareness and usage of digital financial products and services, March 2017
                                  • Digital financial advice with a female focus: WorthFM, Ellevest and Joy
                                    • Household debt, home prices biggest risk to Canadian economy, according to the Bank of Canada
                                      • Canada’s growth expected to top the G7 this year as OECD boosts forecast
                                      • Key Players – What You Need to Know

                                        • Canada's first artificial intelligence Exchange-Traded Fund hits the market
                                          • Canada’s first Bitcoin fund launched
                                            • Wealthsimple launches robo-advisor service in the UK
                                              • National Bank makes a $6 million investment in Nest Wealth
                                                • RBC and others join the robo-advisory bandwagon
                                                • Industry Developments and Innovations

                                                  • Canada's first artificial intelligence Exchange-Traded Fund hits the market
                                                    • Canada’s first Bitcoin fund launched
                                                      • Robo-advisors
                                                        • Wealthsimple launches robo-advisor service in UK, its second international market
                                                          • Robo-advisor Nest Wealth branches out in search of scale
                                                            • National Bank makes a $6 million investment in Nest Wealth
                                                              • RBC and others join the robo-advisory bandwagon
                                                              • Marketing Campaigns

                                                                • CIBC paints a picture
                                                                  • Figure 10: Artist Jen Mann captures the essence of CIBC Private Wealth Management client Monika Deol, May 2017
                                                                • Wealthsimple gift cards
                                                                  • Manulife’s creepy carnival
                                                                    • Figure 11: Carnival, September 2017
                                                                  • Selected campaigns from Mintel Comperemedia
                                                                    • BMO SmartFolio Automated Investing Solutions
                                                                      • Figure 12: BMO online advertisement for SmartFolio, November 2017
                                                                    • Sun Life pitches the value of advice
                                                                      • Figure 13: Sun Life Financial advice online advertisement, November 2017
                                                                  • The Consumer – What You Need to Know

                                                                    • Around half of Canadians have a TFSA and/or an RRSP
                                                                      • Around half of investors use a retail bank as their main investment company
                                                                        • One in five millionaires use a bank-owned discount brokerage
                                                                          • More than half do not want advisors to work on commissions
                                                                            • Willingness to use robo-advisors strongly varies by age and gender
                                                                              • Most investors not enamoured with passive investing
                                                                                • Few consumers have changed their primary investment company in the last five years
                                                                                • Ownership of Investments

                                                                                  • One in 20 Canadians have more than $1 million in investments
                                                                                    • Figure 14: Breakdown of investments, October 2017
                                                                                  • Atlantic Canadians have a generally lower ownership
                                                                                    • Men more likely to own some products
                                                                                      • Figure 15: Product ownership (select), by gender, October 2017
                                                                                    • Around half of Canadians have a TFSA and/or an RRSP
                                                                                      • Figure 16: Product ownership, October 2017
                                                                                      • Figure 17: Ownership of investment products (selected), by asset level, October 2016
                                                                                    • Around one in four Chinese Canadians have stocks and/or mutual funds
                                                                                      • Figure 18: Product ownership, Chinese Canadians vs overall population, October 2017
                                                                                  • Wealth Management

                                                                                    • Around half of investors use a retail bank as their main investment company
                                                                                        • Figure 19: Type of financial institution used for investments, October 2017
                                                                                      • One in five millionaires use a bank-owned discount brokerage
                                                                                        • Figure 20: Type of financial institution used (select), by amount of investments, October 2017
                                                                                      • Men are more likely to use bank-owned discount brokerages, women insurance companies
                                                                                        • Figure 21: Type of financial institution used for investments (select), by gender, October 2017
                                                                                      • Around seven in 10 Asian Canadians use banks/bank wealth management subsidiaries
                                                                                        • Figure 22: Type of financial institution used for investments (select), Asian Canadians vs overall, October 2017
                                                                                    • Financial Advice

                                                                                      • Almost half of investors use financial advisors
                                                                                        • Figure 23: Use of financial advisor, October 2017
                                                                                      • Reliance on a financial advisor is higher among the affluent
                                                                                        • Figure 24: Use of financial advisor, by affluence, October 2017
                                                                                      • Around three in four advised clients trust advisors to act in their best interests
                                                                                        • Figure 25: Attitudes regarding financial advice, October 2017
                                                                                      • More than half do not want advisors to work on commissions
                                                                                        • Figure 26: Attitudes regarding financial advice, October 2017
                                                                                      • Two in three believe referrals most effective way to choose an advisor
                                                                                        • Figure 27: Attitudes regarding financial advice, October 2017
                                                                                      • Younger clients more likely to agree that advisors are useful for those with a large amount of assets
                                                                                        • Figure 28: Attitudes regarding financial advice, by age, October 2017
                                                                                    • Robo-advisors

                                                                                      • One in four advised clients are willing to use robo-advisors
                                                                                        • Willingness to use strongly varies by age and gender
                                                                                          • Figure 29: Agreement with statement on use of robo-advisors, by age and gender, October 2017
                                                                                        • Robo-advisors: immense potential but could be challenges for full-service providers
                                                                                        • Investing Preferences

                                                                                          • Most investors not enamoured with passive investing
                                                                                            • Figure 30: Attitudes towards investing (% agree), October 2017
                                                                                          • Discount brokerage customers more likely to prefer passive investments
                                                                                            • Figure 31: Attitudes towards investing (% agree), discount brokerage clients vs overall, October 2017
                                                                                          • Majority prefer low-risk investments but 35-54s are less likely
                                                                                            • Figure 32: Attitudes towards risk tolerance and financial advice, October 2017
                                                                                          • Around one in four trust independent advisors more
                                                                                            • Figure 33: Attitudes towards investing (% agree), independent investment company clients vs overall, October 2017
                                                                                          • Around one in five 18-34s feel investment marketing is male-directed
                                                                                            • Figure 34: Attitudes towards investing (% agree), by age, October 2017
                                                                                        • Attrition

                                                                                          • Only around one in eight consumers have changed their primary investment company in the last five years
                                                                                            • Figure 35: Changing investment provider (Attrition %), October 2017
                                                                                          • Young males more likely to change their investment company
                                                                                            • Figure 36: Change of primary investment company, by age and gender, October 2017
                                                                                          • Discount brokerage customers more likely to have shifted
                                                                                            • Figure 37: Change of primary investment company, by type of financial institution, October 2017
                                                                                          • Performance, fees and product offerings are the top reasons for attrition
                                                                                            • Figure 38: Reasons for attrition, October 2017
                                                                                          • Awareness of investment fees is high among advised clients
                                                                                            • Figure 39: Attitudes towards financial advice (% agree), by assets, October 2017
                                                                                          • Awareness of fees is lower among general investors
                                                                                          • Appendix – Data Sources and Abbreviations

                                                                                            • Data sources
                                                                                              • Consumer survey data
                                                                                                • Abbreviations and terms

                                                                                                Wealth Advisory Services - Canada - December 2017

                                                                                                US $3,995.00 (Excl.Tax)