A recent study commissioned by the CFA Institute revealed that trust among Canadian investors for their advisors had fallen since 2013.
Entitled From Trust to Loyalty: A Global Survey of What Investors Want
, the survey also showed that in Canada, strong ethics was the most important factor for clients.
Sue Lemon is CEO of the CFA Society Toronto, the institute’s third largest society worldwide after New York and London. She explains that while Canada’s trust level may be down, it is still ahead of the curve internationally.
“Overall, trust globally is up from 50% to 61% so that’s the good news,” she says. “In Canada, we are still above the global average with 64 per cent, but that is down from the 2013 survey when we were at 76%. Globally the financial markets have done better in that timeframe, while the reverse is true for Canada, so I think that might be the rationale for the change in sentiment.”
The survey also displayed that Canada differed from other nations in the importance it placed upon the ethical standards of advisors.
“Canada has experienced quite a bit of turmoil in the energy markets over the past few years, and that has affected many investors’ portfolios,” she says. “What is interesting about here is how important ethical standards are. When investors in Canada were asked what the most important factor for them was, it is much higher here at 80% versus 69% globally.”
The introduction of CRM2 is set to change the client-advisor relationship substantially. Now that fees will be very much out in the open, investors will know exactly what they are paying for. Not surprisingly, CFA Society Toronto’s CEO is in favour of the new regulations.
“We are moving in the right direction with the proposal for best interests standard by the regulators and the government,” she says. “As that progresses and the wording is sorted out, that will be helpful for investors to understand what their rights are. From a regulatory standpoint, we want things to be as simple as possible. That keeps costs nice and low for investors.”
With its new campaign – The Difference that Matters – the CFA Institute is hoping to counteract any feelings of mistrust among the public for financial advisors. For the CFA Society Toronto, maintaining the reputation of the profession is paramount.
“From the institute’s perspective, we want to continue to build a profession that is trusted, valued and benefits society,” says Lemon. “It is very important that people are confident and feel they grow their savings at a time when the demographics show we need to do that. CFA charterholders do already adhere to a rigorous code of ethics and standards in professional conduct, and throughout our history we have always stood for that.”