A survey of 2,407 Canadians reveals that most people don’t use a financial advisor. The ones who do have a poor understanding of how their advisors are compensated.

The British Columbia Securities Commission (BCSC) released the results of its Smarter Investor Study on Nov. 3. The research examines client-advisor relationships in Canada, and it shows that only 30% of Canadians over the age of 34 invest with an advisor. Of the remaining 70%, 19% were do-it-yourself investors (people who invest but do not work with an advisor) while 51% of the respondents simply did not own any investments.

Of those who do rely on professional investment advice, more than half said they were not sure how much they pay for the service. In addition, less than one in five knows the method by which their advisor is paid or they have never asked about compensation. The survey also revealed that only 46% of investors checked the background of their advisors, and of these 53% verified his or her registration.

Most of those who have advisors recognize that they have some obligations in the relationship; they agreed they have a responsibility to ask questions about their investments until they fully understand them (76%), to review their portfolio holdings and the performance of their investments on a regular basis (76%), to keep their advisors informed of changes in their financial situation (74%), to review all documents related to their account (70%), and to understand the risk and return of every investment that their advisor recommends (69%).

“Investors need to know the importance of being actively involved in their relationship with their investment advisor and advisors need to encourage their clients in this,” comments BCSC chairwoman and CEO Brenda Leong. “Our study shows that investors who know the most, have the right attitudes, do the right things, and whose advisors do the right things, all score well above average on our Smarter Investor Index.”