Description

“Market fluctuations during the pandemic have reinforced the need for quality financial advice. While most advised clients report a high degree of satisfaction, many are unsure how to evaluate the quality of advice. There are also segments of DIY investors who prefer to eschew financial advisors and use low-cost online brokerages. Perhaps these investors will be more drawn to professional advice in a bear market environment which hasn’t been witnessed in some years.”
– Sanjay Sharma, Senior Financial Services Analyst

Key issues covered in this Report

  • The impact of COVID-19 on financial advice.
  • This Report takes a deeper look at the financial advisory industry in Canada. It delves into issues such as usage, retirement planning priorities, choice factors, trust, value perception, satisfaction and attitudes towards financial advice.
  • This Report was written between October 12 and November 11, 2021.

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Definition
        • Executive Summary

            • Top takeaways
              • Market overview
                • Impact of COVID-19 on financial advice
                  • Figure 1: Short-, medium- and longer-term impact of COVID-19 on financial advice, November 2021
                • Opportunities
                  • Satisfaction with financial advisor is highest among over-55s…
                    • …while satisfaction with robo-advisors is also high
                      • Retirement planning implications of an aging population
                        • Advised clients and affluent investors more convinced about their value
                          • Challenges
                            • Majority of Canadians uncertain how to evaluate quality of advice
                              • DIY investing is an alternative to the use of advisors
                              • The Market – Key Takeaways

                                • Canada has an aging population
                                  • Diminished capacity among seniors a consequence of aging population
                                    • Impact of COVID-19 on investing and advice
                                      • Client-focused reforms
                                      • The Market – Market Factors

                                        • Canada has an aging population
                                          • Figure 2: Proportion of 0-14s and over-65s in the Canadian population, 1988-2068*
                                        • Diminished capacity among seniors a consequence of aging population
                                          • Financial education courses specializing in the elderly would help advisors
                                            • Figure 3: Financial Consumer Agency of Canada Instagram post, June 2021
                                          • Impact of COVID-19 on investing and advice
                                            • Client-focused reforms
                                              • Implications for financial advisors
                                              • Companies and Brands – Key Takeaways

                                                • Co-operators expands into wealth management
                                                  • BMO’s adviceDirect launches premium service
                                                    • Banks cannot cut off third-party funds for clients
                                                      • RBC Wealth Management prepares its advisors for an aging population
                                                      • Competitive Strategies

                                                        • Co-operators expands into wealth management
                                                          • Co-operators’ rebranding campaign
                                                              • Figure 4: Your future, your plan | Co-operators, October 2021
                                                            • BMO’s adviceDirect launches premium service
                                                              • Figure 5: BMO adviceDirect Facebook ad, October 2021
                                                            • Banks cannot cut off third-party funds for clients
                                                              • CSA’s other plans
                                                                • RBC Wealth Management prepares its advisors for an aging population
                                                                • Marketing Campaigns

                                                                  • BMO shows how good advice leaves clients with no regrets…
                                                                    • Figure 6: BMO Private Wealth | Great advice pays off, September 2021
                                                                  • …while Wealthsimple takes the opposite tack
                                                                    • Figure 7: Wealthsimple Instagram post, May 2021
                                                                  • Questrade’s new mobile app
                                                                    • Figure 8: Questrade Instagram post, September 2021
                                                                    • Figure 9: Questrade mobile ad, October 2021
                                                                • The Consumer – What You Need to Know

                                                                  • More than half of Canadians have used a financial advisor/planner
                                                                    • Income management is the top later-life financial priority
                                                                      • High degree of satisfaction with advisors
                                                                        • Conflicting views on the usefulness of financial advisors
                                                                        • Use of Financial Advisors

                                                                          • More than half of Canadians have used a financial advisor/planner
                                                                              • Figure 10: Use of financial advisors, 2021
                                                                            • Bank-based advisors most commonly used
                                                                                • Figure 11: Use of financial human advisors (select), by age, 2021
                                                                              • Around one in six 18-34s have used a robo-advisor
                                                                                • Figure 12: Use of financial robo-advisors, by age, 2021
                                                                              • Affluent clients prefer independent firms and wealth management subsidiaries with human advisors
                                                                                • Figure 13: Use of financial advisors (select), by amount of investments, 2021
                                                                                • Figure 14: Edward Jones financial advisor ad, October 2021
                                                                                • Figure 15: TD wealth management Facebook ad, July 2021
                                                                              • Majority of consumers uncertain about quality of advice received
                                                                                • Figure 16: “It is difficult to know if you are getting good financial advice” (% agree), by type of advisor used, 2021
                                                                              • DIY investing is an alternative to the use of advisors
                                                                                • Figure 17: Not using a finance advisor to manage portfolio, by age, 2021
                                                                              • Asian Canadians have a higher advisor usage
                                                                                • Figure 18: Use of financial advisors (select), Asian Canadians vs overall, 2021
                                                                            • Choosing a Financial Advisor

                                                                              • Face-to-face interaction, cost and reputation are the top choice factors
                                                                                • Figure 19: Human financial advisor choice factors, 2021
                                                                              • Age influences strength of choice factors
                                                                                • Figure 20: Choice factors (select), 18-44s vs over-45s, 2021
                                                                              • Advised clients have stronger preferences on most choice factors
                                                                                  • Figure 21: Choice factors, by those who use an advisor vs those who do not, 2021
                                                                                • A section of consumers do not want commissions
                                                                                    • Figure 22: Attitudes related to commissions and referrals (% agree), 2021
                                                                                • Retirement Planning

                                                                                  • Income management is the top later-life financial priority
                                                                                    • Figure 23: Retirement planning priorities, 2021
                                                                                  • Retirement planning implications of an aging population
                                                                                    • Age influences later-life priorities
                                                                                        • Figure 24: Retirement planning priorities (select), by age, 2021
                                                                                      • Over-65s most confident about retirement income
                                                                                        • Figure 25: Attitudes towards retirement planning (% agree), by age, 2021
                                                                                      • Women are more concerned about income adequacy
                                                                                        • Figure 26: Attitudes towards retirement planning (% agree), men vs women, 2021
                                                                                        • Figure 27: TD wealth estate planning ad, November 2021
                                                                                      • Women have more concerns
                                                                                        • Figure 28: Retirement planning priorities (select), men vs women, 2021
                                                                                      • Affluent most concerned about long-term care, taxes and wills
                                                                                        • Figure 29: Retirement planning priorities (select), by amount of investments, 2021
                                                                                    • Satisfaction

                                                                                      • High degree of satisfaction with advisors
                                                                                        • Figure 30: Attitudes related to satisfaction and attrition, 2021
                                                                                      • Satisfaction with financial advisor is highest among over-55s
                                                                                        • Satisfaction with robo-advisors is also high
                                                                                          • Figure 31: Wealthsimple post on socially responsible funds, September 2021
                                                                                        • Half of 18-44s have switched their advisor in the past
                                                                                          • Figure 32: Attitudes related to satisfaction and attrition (% agree), 18-44s vs over-45s, 2021
                                                                                          • Figure 33: “I switched advisors in the past due to the performance of my portfolio” (% agree), by age and gender, 2021
                                                                                      • Value Perception

                                                                                        • Conflicting views on the usefulness of financial advisors
                                                                                          • Figure 34: Attitudes regarding the usefulness of financial advisors, 2021
                                                                                        • Advised clients and affluent investors more convinced about their value
                                                                                          • Figure 35: Attitudes regarding the usefulness of financial advisors (% agree), by those who use an advisor vs those who do not, 2021
                                                                                          • Figure 36: Attitudes regarding the usefulness of financial advisors (% agree), by amount of investments held, 2021
                                                                                        • Younger clients are less convinced about advisor value, although COVID-19 was a wake-up call
                                                                                            • Figure 37: Attitudes regarding the usefulness of financial advisors (% agree), by age, 2021
                                                                                          • Majority of Canadians uncertain how to evaluate quality of advice
                                                                                          • Financial Awareness and Other Attitudes

                                                                                            • Most consumers want better compensation disclosure
                                                                                              • Figure 38: General attitudes about financial advice, 2021
                                                                                              • Figure 39: Financial Consumer Agency of Canada’s Instagram post, October 2021
                                                                                            • Younger consumers and men more likely to use employer-recommended financial advisor
                                                                                              • Figure 40: General attitudes about financial advice (% agree), 18-44s vs over-45s, 2021
                                                                                            • Licensing awareness is low
                                                                                              • Figure 41: General attitudes about financial advice (% agree), men vs women, 2021
                                                                                            • Online engagement and compensation awareness varies by age and gender
                                                                                              • Figure 42: Attitudes related to financial knowledge (% agree), by age and gender, 2021
                                                                                              • Figure 43: TD post on women and finances, May 2021
                                                                                          • Appendix – Data Sources and Abbreviations

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

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