Attitudes towards Financial Advice - Canada - January 2019

OVERVIEW
Regional classifications
Income
EXECUTIVE SUMMARY 
The issues
Less than half of Canadians have used a financial advisor
Figure 1: Use of financial advisor, October 2018
Lack of sufficient assets is the main reason cited by non-users
Figure 2: Reasons for not using a financial advisor, October 2018
Around three in four clients cite retirement planning as the primary reason for usage
Figure 3: General attitudes towards advisors, October 2018
Men and younger clients have a higher attrition rate
Figure 4: “I have switched advisors in the past due to the performance of my portfolio” (% agree), by age and gender, October 2018
Majority of Canadians uncertain how to evaluate quality of advice
Figure 5: General attitudes towards financial advice, October 2018
The opportunities
Younger Canadians may need more convincing about financial advice
Figure 6: Select attitudinal statements related to value perception (% any agree), 18-44s vs over-45s, October 2018
Robo-advisors may impact existing advisory business models
Figure 7: Select general attitudes towards financial advice (% any agree), 18-44s vs over-45s, October 2018
Younger clients have more technical knowledge but are more inhibited
Figure 8: Select attitudes towards financial advice (% agree), 18-44 vs over-45s, October 2018
Most believe that advisors should do more to market themselves
What it means
THE MARKET – WHAT YOU NEED TO KNOW 
Canada’s population is aging
Diminished capacity among seniors a consequence of aging population
Ontario government eyeing more oversight of financial planners
MFDA issues update on total cost reporting
DSC ban, multiple conduct changes coming from CSA
Financial education courses specializing in the elderly would help advisors
MARKET FACTORS
Canada’s population is aging
Figure 9: Population aged 0-14 and 65+, as of July 1, 1995-2035*
Diminished capacity among seniors a consequence of aging population
Figure 10: Canadian population, by age, 2016
Financial education courses specializing in the elderly would help advisors
Ontario government eyeing more oversight of financial planners
MFDA issues update on total cost reporting
DSC ban, multiple conduct changes coming from CSA
Know Your Client
Know Your Product
Suitability
Conflicts of interest
Relationship disclosure information
KEY PLAYERS – WHAT YOU NEED TO KNOW
HSBC launches foray into digital advisors in Canada
Wealthsimple to launch mutual-fund investment firm with in-house advisors
RBC’s new robo platform aimed at digitally-savvy clients
CIBC becomes the last of the major banks to launch its own ETFs
Allianz stepping into the Canadian fixed-income ETF market
New partnership gives mutual-fund dealers in Canada greater access to ETFs
Fidelity collaborates with Amazon to develop a digital financial advisor accessible via a virtual reality headset
INNOVATIONS & INDUSTRY DEVELOPMENTS 
Wealthsimple to launch mutual-fund investment firm with in-house advisors
HSBC launches foray into digital advisors in Canada
RBC’s new robo platform aimed at digitally-savvy clients
Questrade slashes fees on robo-advisory service
CIBC becomes the last of the major banks to launch its own ETFs
Allianz stepping into the Canadian fixed-income ETF market
High-net-worth investors now able to hold bitcoin fund in registered accounts
New partnership gives mutual-fund dealers in Canada greater access to ETFs
Fidelity collaborates with Amazon to develop a digital financial advisor accessible via a virtual reality headset
MARKETING INITIATIVES
Investors Group rebrands to better reflect its value proposition
TD to revamp its discount brokerage firm
THE CONSUMER – WHAT YOU NEED TO KNOW
Less than half of Canadians have used a financial advisor
Lack of sufficient assets is the main reason cited by non-users
Cost, in-person advice and reputation are the top choice factors
Most advisors explain portfolio performance
Men and younger clients have a higher attrition rate
Majority believe that advisors are a motivating force to save more
Around three in four clients cite retirement planning as the primary reason for usage
USE OF FINANCIAL ADVISORS
Less than half of Canadians have used a financial advisor
Figure 11: Use of financial advisor, October 2018
Older Canadians have higher usage
Figure 12: Use of financial advisor, by age, October 2018
Bank advisors most commonly used
Figure 13: Type of financial advisor used, October 2018
Rise of family offices in Canada
Older clients prefer independent advisors
Figure 14: Type of financial advisor used (select), 18-44s vs over-45s, October 2018
REASONS FOR NOT USING AN ADVISOR
Lack of sufficient assets is the main reason cited by non-users
Figure 15: Reasons for not using a financial advisor, October 2018
Fees are also a significant barrier
Older non-users more likely to self-manage investments
Figure 16: Reasons for not using a financial advisor (select), 18-44s vs over-45s, October 2018
Perception of bias cited by almost one in four over-45s
Value-add perceptions and trust are other barriers to usage
Women non-users more likely to cite insufficient assets while men are more likely to self-manage investments
Figure 17: Reasons for not using a financial advisor (select), by gender, October 2018
CHOICE FACTORS
Cost, in-person advice and reputation are the top choice factors …
Figure 18: Choice factors when choosing a financial advisor, October 2018
… but cost matters less to advised clients
Figure 19: Choice factors when choosing a financial advisor (select), users vs non-users, October 2018
Older Canadians have stronger preferences when looking for an advisor
Figure 20: Choice factors when choosing a financial advisor (select), 18-44s vs over-45s, October 2018
TURF Analysis
Methodology
Cost and face-to-face meetings matter to nearly three in four consumers
Figure 21: TURF analysis – Choice factors, October 2018
AWARENESS OF FINANCIAL ADVICE
Most advisors explain portfolio performance
Figure 22: Attitudes towards financial advice, October 2018
Younger clients have more technical knowledge but are more inhibited
Figure 23: Select attitudes towards financial advice (% agree), 18-44s vs over-45s, October 2018
Female advised clients are less aware of technicalities
Figure 24: Select attitudes towards financial advice (% agree), by gender, October 2018
VALUE PERCEPTION
Around three in four clients cite retirement planning as the primary reason for usage
Figure 25: General attitudes towards advisors, October 2018
Men and younger clients have a higher attrition rate
Figure 26: “I have switched advisors in the past due to the performance of my portfolio” (% agree), by age and gender, October 2018
Majority believe that advisors are a motivating force to save more
Figure 27: Attitudes related to value perception about financial advice, October 2018
Younger Canadians may need more convincing …
Figure 28: Select attitudinal statement related to value perception (% any agree), 18-44s vs over-45s, October 2018
… while advised clients are more strongly convinced about their value
Figure 29: Attitudinal statements related to value perception, advised clients vs non-users, October 2018
Four in five clients feel they are better off as a result of financial advice
Figure 30: Attitudes related to value of advisors, October 2018
Most believe that advisors should do more to market themselves
GENERAL ATTITUDES TOWARDS FINANCIAL ADVICE
Majority of Canadians uncertain how to evaluate quality of advice
Figure 31: General attitudes towards financial advice, October 2018
Only a minority understand advisor compensation
Women less keen on making their own financial decisions
Figure 32: Select general attitudes towards financial advice (% any agree), by gender, October 2018
Three in 10 18-44s positive on robo-advisors
Robo-advisors many impact existing advisory business models
Figure 33: Select general attitudes towards financial advice (% any agree), 18-44s vs over-45s, October 2018
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Abbreviations and terms