New survey examines Canadian attitudes to financial advice and fees

Nearly 50% of those surveyed said they rely on an advisor for help with “most or all investment decisions”

New survey examines Canadian attitudes to financial advice and fees

Within the industry, conversations on the value of advice and how that should be calculated are commonplace. Everyone has an opinion (that’s generally well-informed) and most are more than happy to share it. But, how do the people who matter - investors – feel about these issues and financial advice in general? A new survey aimed to find out.

Conducted by the Gandalf Group and commissioned by AGF Management Limited, the survey questioned a core sample of 1299 individual Canadian investors on issues relating to individual investors, the advisory services industry, fund providers and regulators, including: satisfaction with advice, fees, transparency and investment options, the role of advisors and new reporting obligations, awareness and assessments of various types of commissions and fees.

The study discovered that the majority of Canada-based investors use an advisor “at least somewhat” when constructing a portfolio and nearly 50% said they rely on an advisor for help with “most or all investment decisions.”

Among those investors who do use an advisor, the findings were positive. “Fully 70% are very satisfied and only 3% are very dissatisfied,” the survey found. “Most advised investors gave very high satisfaction ratings to their advisors when it comes to providing unbiased advice, being transparent about fees and helping to manage costs of investing.”

The key driver for satisfaction among investors who use advisors is, unsurprisingly, their rate of return - they are much more likely to be focused on growth and returns.

The survey also found a high level of awareness on fees amongst respondents. 89% said they review the fees and commissions disclosed in their statements and 91% reported being satisfied with their advisors’ level of transparency on fees. The survey also found that the majority of investors consider trailing commissions to be acceptable and “no different than other forms of advisor compensation”.

Around 50% of investors say they have either heard very little or nothing at all about trailing commissions. Interestingly, investors who consider themselves to be “knowledgeable about investing” were the ones most likely to accept trailing commissions. The survey discovered that, when forced to make a choice, respondents would prefer their fees be calculated on investment performance rather than based on service provided or hourly rates. The study found that 24% of investors would be less likely to use an advisor if the ability to pay fees indirectly through products was discontinued and they were charged directly for advice and service.

“We commissioned the Gandalf Group to design a fact-based survey that was objective and focused on the interests of Canadian investors with respect to regulatory initiatives,” said Blake Goldring, Chairman and Chief Executive Officer, AGF Management Limited. “As a long-standing participant in the Canadian financial services industry we have always been an advocate for sound regulatory change that is grounded in the needs of investors.”

“We are pleased that this survey is addressing these investment issues head on. When it comes to investing, we want to know what is top of mind for Canadian investors to ensure the advisors we work with every day are armed with the research, products and services they need to help their clients reach their financial goals,” added Goldring.

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