CSA publishes multi-year research study on investor attitudes and behaviours

By The IJ Staff | August 31 2020 09:30AM

Photo: Freepik

The Canadian Securities Administrators (CSA) has published their findings from a four-year research study to measure what investors know and think about fees, about the performance of their investments and how they interact with advisors.

The research found improvements between 2016 and 2019 in 40 per cent of the issues examined.

The study was prompted by the implementation of two CSA reforms including the Client Relationship Model (CRM2) and new Point of Sale (POS) rules. Both amendments took effect between 2014 and 2016. The CSA announced plans to study the impact of those reforms in August 2016.

The study includes one baseline survey of 3,500 Canadian investors, conducted in 2016, followed by six successive surveys – each with about 2,000 respondents – which collected information for more than 150 measurable items.

The CSA says Canadians are gaining more confidence in navigating the market, but adds that there is substantial room for improvement in the investing experience, especially in understanding the impact of fees on investment returns.

According to the research, more investors in 2019 than in previous surveys said they had a better understanding about the impact fees have on investment returns: In 2019, 51 per cent said they understood the impact fees have on their investments, up from 41 per cent in 2016. The portion of respondents who are aware that they pay fees for the operation, management and administration of their investment account also rose to 51 per cent, up from 43 per cent at the beginning of the study.

Canadians are also more confident about monitoring and assessing the performance of their investments, as 86 per cent report feeling very confident or somewhat confident in 2019, up from 80 per cent in 2016.

Advisor satisfaction numbers, however, would appear to be on the decline. Satisfaction with advisors has dropped five per cent since the baseline survey was conducted, declining to 83 per cent in 2019, down from 88 per cent in 2016.

Both Ontario and Quebec saw statistically significant drops in advisor satisfaction numbers, declining eight per cent and six per cent, respectively, over the course of the study. Those with advisors in Ontario (27 per cent, up six points since the baseline survey was conducted) and in Saskatchewan (21 per cent, up seven points since the baseline survey), were most likely to change advisors.

Those advised with discretionary authority reported an eight per cent jump since the baseline in likelihood to change advisors. Similarly, those in Ontario and Saskatchewan were most likely to switch investment firms; both saw a seven per cent jump in response to questions about switching firms, up to 25 per cent in Ontario and 22 per cent in Saskatchewan said they were likely to switch investment firms. The number of those advised with discretionary authority who were interested in switching firms climbed 11 per cent – to 24 per cent, up from just 13 per cent in 2016.

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