Canadian banks are doing well with advice, except for one major thing

New JD Power report shows misalignment between supply and demand

Canadian banks are doing well with advice, except for one major thing
Steve Randall

Canadian bank customers are keen to receive financial advice, and they are generally satisfied with what they receive. But there are some gaps between what’s on offer and what’s required.

A new report from J.D. Power reveals that almost two thirds of customers are suffering some degree of financial stress and eight in ten are receiving advice from their financial institution with 77% acting on the advice they are given such as shifting funds between accounts (29%); updating account settings (21%); downloading the mobile app (20%); and scheduling a meeting with a bank rep (20%).

When advice is acted upon, customers report higher levels of satisfaction with their bank, typically 142 points higher on a 1,000 point scale.

Asked about receiving financial advice from their banks, younger customers (61% of under 40s vs. 47% of older respondents) and new immigrants (79% of those who have been in Canada for less than two years) are more likely to say they remember having done so.

However, banks are still not providing enough financial planning advice with a 16 percentage point gap between those receiving this and those who want it, especially around tax reduction. Almost every category and topic of advice had gaps between what is supplied and what is required.

As for the FIs that are leading in providing financial advice, RBC Royal Bank ranks highest in customer satisfaction for a fourth consecutive year, scoring 582 points out of 1,000. Scotiabank (568) ranks second and the segment average is 566.

“Bank customers’ appetites for financial advice is high and an increase in quality advice will only increase their customer satisfaction,” said Jennifer White, senior director for banking and payments intelligence at J.D. Power. “Therefore, providing personalized advice is mutually beneficial as customers who receive it are taking actions and benefitting financially, while banks are experiencing strong engagement and brand advocacy.”