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Attitudes Towards Financial Advice - Canada - January 2019

“In times of market turbulence, client communication becomes even more important for financial advisors as jittery clients seek reassurance and advice.”

– Sanjay Sharma, Senior Financial Services Analyst

This report examines the following issues:

  • Less than half of Canadians have used a financial advisor
  • Lack of sufficient assets is the main reason cited by non-users
  • Around three in four clients cite retirement planning as the primary reason for usage
  • Men and younger clients have a higher attrition rate
  • Majority of Canadians uncertain how to evaluate quality of advice

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Table of contents

  1. Overview

      • Regional classifications
        • Income
        • Executive Summary

            • The issues
              • Less than half of Canadians have used a financial advisor
                • Figure 1: Use of financial advisor, October 2018
              • Lack of sufficient assets is the main reason cited by non-users
                • Figure 2: Reasons for not using a financial advisor, October 2018
              • Around three in four clients cite retirement planning as the primary reason for usage
                • Figure 3: General attitudes towards advisors, October 2018
              • Men and younger clients have a higher attrition rate
                • Figure 4: “I have switched advisors in the past due to the performance of my portfolio” (% agree), by age and gender, October 2018
              • Majority of Canadians uncertain how to evaluate quality of advice
                • Figure 5: General attitudes towards financial advice, October 2018
              • The opportunities
                • Younger Canadians may need more convincing about financial advice
                  • Figure 6: Select attitudinal statements related to value perception (% any agree), 18-44s vs over-45s, October 2018
                • Robo-advisors may impact existing advisory business models
                  • Figure 7: Select general attitudes towards financial advice (% any agree), 18-44s vs over-45s, October 2018
                • Younger clients have more technical knowledge but are more inhibited
                  • Figure 8: Select attitudes towards financial advice (% agree), 18-44 vs over-45s, October 2018
                • Most believe that advisors should do more to market themselves
                  • What it means
                  • The Market – What You Need to Know

                    • Canada’s population is aging
                      • Diminished capacity among seniors a consequence of aging population
                        • Ontario government eyeing more oversight of financial planners
                          • MFDA issues update on total cost reporting
                            • DSC ban, multiple conduct changes coming from CSA
                              • Financial education courses specializing in the elderly would help advisors
                              • Market Factors

                                • Canada’s population is aging
                                  • Figure 9: Population aged 0-14 and 65+, as of July 1, 1995-2035*
                                • Diminished capacity among seniors a consequence of aging population
                                  • Figure 10: Canadian population, by age, 2016
                                • Financial education courses specializing in the elderly would help advisors
                                  • Ontario government eyeing more oversight of financial planners
                                    • MFDA issues update on total cost reporting
                                      • DSC ban, multiple conduct changes coming from CSA
                                        • Know Your Client
                                          • Know Your Product
                                            • Suitability
                                              • Conflicts of interest
                                                • Relationship disclosure information
                                                • Key Players – What You Need to Know

                                                  • HSBC launches foray into digital advisors in Canada
                                                    • Wealthsimple to launch mutual-fund investment firm with in-house advisors
                                                      • RBC’s new robo platform aimed at digitally-savvy clients
                                                        • CIBC becomes the last of the major banks to launch its own ETFs
                                                          • Allianz stepping into the Canadian fixed-income ETF market
                                                            • New partnership gives mutual-fund dealers in Canada greater access to ETFs
                                                              • Fidelity collaborates with Amazon to develop a digital financial advisor accessible via a virtual reality headset
                                                              • Innovations & Industry Developments

                                                                • Wealthsimple to launch mutual-fund investment firm with in-house advisors
                                                                  • HSBC launches foray into digital advisors in Canada
                                                                    • RBC’s new robo platform aimed at digitally-savvy clients
                                                                      • Questrade slashes fees on robo-advisory service
                                                                        • CIBC becomes the last of the major banks to launch its own ETFs
                                                                          • Allianz stepping into the Canadian fixed-income ETF market
                                                                            • High-net-worth investors now able to hold bitcoin fund in registered accounts
                                                                              • New partnership gives mutual-fund dealers in Canada greater access to ETFs
                                                                                • Fidelity collaborates with Amazon to develop a digital financial advisor accessible via a virtual reality headset
                                                                                • Marketing Initiatives

                                                                                  • Investors Group rebrands to better reflect its value proposition
                                                                                    • TD to revamp its discount brokerage firm
                                                                                    • The Consumer – What You Need to Know

                                                                                      • Less than half of Canadians have used a financial advisor
                                                                                        • Lack of sufficient assets is the main reason cited by non-users
                                                                                          • Cost, in-person advice and reputation are the top choice factors
                                                                                            • Most advisors explain portfolio performance
                                                                                              • Men and younger clients have a higher attrition rate
                                                                                                • Majority believe that advisors are a motivating force to save more
                                                                                                  • Around three in four clients cite retirement planning as the primary reason for usage
                                                                                                  • Use of Financial Advisors

                                                                                                    • Less than half of Canadians have used a financial advisor
                                                                                                      • Figure 11: Use of financial advisor, October 2018
                                                                                                    • Older Canadians have higher usage
                                                                                                      • Figure 12: Use of financial advisor, by age, October 2018
                                                                                                    • Bank advisors most commonly used
                                                                                                        • Figure 13: Type of financial advisor used, October 2018
                                                                                                      • Rise of family offices in Canada
                                                                                                        • Older clients prefer independent advisors
                                                                                                          • Figure 14: Type of financial advisor used (select), 18-44s vs over-45s, October 2018
                                                                                                      • Reasons for Not Using an Advisor

                                                                                                        • Lack of sufficient assets is the main reason cited by non-users
                                                                                                          • Figure 15: Reasons for not using a financial advisor, October 2018
                                                                                                        • Fees are also a significant barrier
                                                                                                          • Older non-users more likely to self-manage investments
                                                                                                            • Figure 16: Reasons for not using a financial advisor (select), 18-44s vs over-45s, October 2018
                                                                                                          • Perception of bias cited by almost one in four over-45s
                                                                                                            • Value-add perceptions and trust are other barriers to usage
                                                                                                              • Women non-users more likely to cite insufficient assets while men are more likely to self-manage investments
                                                                                                                • Figure 17: Reasons for not using a financial advisor (select), by gender, October 2018
                                                                                                            • Choice Factors

                                                                                                              • Cost, in-person advice and reputation are the top choice factors …
                                                                                                                • Figure 18: Choice factors when choosing a financial advisor, October 2018
                                                                                                              • … but cost matters less to advised clients
                                                                                                                • Figure 19: Choice factors when choosing a financial advisor (select), users vs non-users, October 2018
                                                                                                              • Older Canadians have stronger preferences when looking for an advisor
                                                                                                                • Figure 20: Choice factors when choosing a financial advisor (select), 18-44s vs over-45s, October 2018
                                                                                                              • TURF Analysis
                                                                                                                • Methodology
                                                                                                                  • Cost and face-to-face meetings matter to nearly three in four consumers
                                                                                                                    • Figure 21: TURF analysis – Choice factors, October 2018
                                                                                                                • Awareness of Financial Advice

                                                                                                                  • Most advisors explain portfolio performance
                                                                                                                    • Figure 22: Attitudes towards financial advice, October 2018
                                                                                                                  • Younger clients have more technical knowledge but are more inhibited
                                                                                                                    • Figure 23: Select attitudes towards financial advice (% agree), 18-44s vs over-45s, October 2018
                                                                                                                  • Female advised clients are less aware of technicalities
                                                                                                                    • Figure 24: Select attitudes towards financial advice (% agree), by gender, October 2018
                                                                                                                • Value Perception

                                                                                                                  • Around three in four clients cite retirement planning as the primary reason for usage
                                                                                                                    • Figure 25: General attitudes towards advisors, October 2018
                                                                                                                  • Men and younger clients have a higher attrition rate
                                                                                                                    • Figure 26: “I have switched advisors in the past due to the performance of my portfolio” (% agree), by age and gender, October 2018
                                                                                                                  • Majority believe that advisors are a motivating force to save more
                                                                                                                    • Figure 27: Attitudes related to value perception about financial advice, October 2018
                                                                                                                  • Younger Canadians may need more convincing …
                                                                                                                    • Figure 28: Select attitudinal statement related to value perception (% any agree), 18-44s vs over-45s, October 2018
                                                                                                                  • … while advised clients are more strongly convinced about their value
                                                                                                                    • Figure 29: Attitudinal statements related to value perception, advised clients vs non-users, October 2018
                                                                                                                  • Four in five clients feel they are better off as a result of financial advice
                                                                                                                    • Figure 30: Attitudes related to value of advisors, October 2018
                                                                                                                  • Most believe that advisors should do more to market themselves
                                                                                                                  • General Attitudes towards Financial Advice

                                                                                                                    • Majority of Canadians uncertain how to evaluate quality of advice
                                                                                                                      • Figure 31: General attitudes towards financial advice, October 2018
                                                                                                                    • Only a minority understand advisor compensation
                                                                                                                      • Women less keen on making their own financial decisions
                                                                                                                          • Figure 32: Select general attitudes towards financial advice (% any agree), by gender, October 2018
                                                                                                                        • Three in 10 18-44s positive on robo-advisors
                                                                                                                          • Robo-advisors many impact existing advisory business models
                                                                                                                            • Figure 33: Select general attitudes towards financial advice (% any agree), 18-44s vs over-45s, October 2018
                                                                                                                        • Appendix – Data Sources and Abbreviations

                                                                                                                          • Data sources
                                                                                                                            • Consumer survey data
                                                                                                                              • Abbreviations and terms

                                                                                                                              Attitudes Towards Financial Advice - Canada - January 2019

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