Mutual fund investors see the value of financial advice: study

Research shows that Canadian mutual fund investors appreciate financial advice

The 2016 Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry, a report conducted by research firm Pollara on behalf of the IFIC, found that Canadian mutual fund investors highly value their financial advisors’ guidance.

Results from the report show high confidence in financial advisors, with 95% of respondents indicating that they can rely on their advisor to provide sound advice and 88% reporting better returns as a result of the advice they receive. Eighty-two per cent attribute better savings and investment habits to their advisor, while 91% say they get value for the money they pay to their advisor.

“The high value that Canadian mutual fund investors place on advice is well-supported by empirical research that demonstrates the value advice delivers to investors,” said IFIC president and CEO Paul C. Bourque.

This dovetails nicely with recent research by the Center for Interuniversity Research and Analysis of Organizations (CIRANO) in Quebec. It found that, after controlling for a myriad of variables, household that employed a financial advisor managed to accumulate significantly more wealth than those that did not. These benefits were also found to increase over time: invested assets of advised households were 1.9 times greater than that of unadvised households after four years, and the ratio increased to 3.9 times after 15 years.

“It is important for public policy-makers and regulators to respect the confidence Canadian investors have in the benefits of financial advice and to protect investor access to advice, regardless of account size,” Bourque said. “This means ensuring that our regulatory framework continues to make investment opportunities and access to advice available to all Canadians at competitive prices.”

Based on the Pollara survey findings, mutual fund investors prefer to have choice when it comes to payment options. Just over half (54%) would prefer to compensate their advisor via bundled fees, whereas just over a third (37%) would prefer to pay via a direct fee.

Mutual fund investors also reported increased awareness of the fees and compensation they pay their advisors. The percentage of clients who recall discussions of fees and commissions with their advisors rose six percentage points to 62%. Those who recall discussing compensation rose eight points, while those who recall discussing MERs rose four points.

The 2016 Pollara report was based on 1,000 telephone interviews with mutual fund holders aged 18 years old and above who make all or some of the mutual fund purchasing decisions in their household.

“Canadian mutual fund investors have consistently expressed strong confidence in the ability of mutual funds to meet their goals, more than any other financial product. There is no other product that offers the same degree of opportunity, flexibility and protection to investors,” Bourque said.

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