Investors satisfied with their advisors, says new survey

par The IJ Staff | June 01 2017 01:30PM

Canadian investors are satisfied with the current system of financial advice in Canada, says a new survey conducted by the Gandalf Group for AGF Management Limited.

“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,” stated Blake Goldring, Chairman and Chief Executive Officer, AGF Management Limited, in an announcement this week. “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.”

Most investors rely on advisors at least somewhat when it comes to helping with decisions about their portfolio, the survey found. Nearly half said they rely on advisors to help make most or all investment decisions with them.

Fee transparency

Investors surveyed indicated they are highly satisfied with the relationship they have with their advisor. Fully 70% are very satisfied, while only 3% are very dissatisfied. Investors gave their advisors very high satisfaction ratings when it comes to providing unbiased advice, being transparent about fees and helping to manage costs of investing.

The survey also indicated that investors who rely on advisors are much more likely to be highly satisfied with the growth and returns in their portfolio than investors who go without advice.

Trailing commissions

With respect to compensation, the survey showed that many investors “do not know a great deal about the trailing commissions they pay and about half say they have heard very little or nothing about trailing commissions.” “Those who consider themselves to be knowledgeable about investing were more likely than others to say trailing commissions were acceptable.”

In a forced choice, the survey showed that investors tended to express a preference for fees based on investment value/performance rather than fees based on service provided or hourly rates. Investors expressed an even clearer preference for deducting fees from their investment portfolios rather than paying them in a direct charge or payment.

Potential advice gap

“Furthermore, if the ability of investors to pay advisors indirectly from products they own were discontinued and advisors charged clients for advice and service directly, the survey found 24% of investors said it would make investors like them less likely to seek out advice from an advisor,” says AGF.  This potential “advice gap” was consistent across all income sizes ranging from assets under $50,000 to those with over $500,000.

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