While many mutual fund and ETF investors highly prize the value of advice they are given, those in the industry say how that advice will be dispensed in the future is more than likely to change.
With technology constantly transforming and the number of Canadians aged 65 and older expected to grow by 68 per cent over the next 20 years, speakers at the annual conference of the Investment Funds Institute of Canada (IFIC) predicted there will be changes coming in how financial advice is distributed down the road.
Leveraging technology
Susan Silma, Head, Risk and Regulatory Business Practices at Sun Life Distributors, said the personalized part of advice will continue to hold up in the near future, but will be much more proactive. Technology, said Silma, will be leveraged more than it is now to anticipate what clients need and want at different life stages with those who value advice the most tending to be those who are older with more assets.
Tim Prescott, senior vice president, Head of Asset Management at Aviso Wealth, agreed the investor-advisor experience will shift from the product to how advice is delivered over the life cycle of a client.
“The challenge for us as an industry is to make sure that we address all the other components and demographics as well,” said Silma. “I can’t imagine my kids will want advice delivered the same way my mother does, for example.”
But just as the average investor is aging, so are advisors, said Michael Walker, Vice President & Head, Mutual Funds Distribution & RBC Financing Planning, RBC.
Blend of human and digital
“We will have to see how this blend of human and digital works,” said Walker. “My sense is we’re going to be delivering advice to more Canadians as we digitize and perhaps only bring in the human when human makes the difference.”
Deaccumulation will also take on a major role as Baby Boomers and Generation Xers retire and require funds to pay their bills.
New strategies will have to be created as investors focus increasingly on issues like taxes and the best way to give money to the next generation, said Walker.
He also said he believes the industry will see the need for more professionalism, with the bar being raised in terms of accreditation.
For example, many advisors are boning up on products like ESG funds. The largest owners of these funds tend to be individual investors, endowments, foundations and families with long-term investment horizons, said Kelly Gauthier, President, Rally Assets.
Performance-driven environment
Karrie Van Belle, Chief Marketing and Innovation Officer at AGF, said that many people are concerned about issues dealing with topics such as climate change, but “rightly or wrongly we still operate in a performance-driven environment.”
According to the annual survey compiled by IFIC and Pollara Strategic Insights, about one quarter of investors currently hold responsible investments and a majority who do not say they may include these investments in their portfolios in the future.
The survey also indicates that eight in 10 mutual fund investors agree that advice is worth the fees and they would not want to handle investments on their own, an increase from last year. Seven in 10 ETF investors would not want to handle investments on their own, an increase of seven points.
In addition, 80 per cent of mutual fund investors and 73 per cent of ETF investors believe that they get a better return on investments due to their financial advisor.
As well, 84 per cent of mutual fund investors and 78 per cent of ETF investors feel more confident that they will reach their investment goals by using a financial advisor.
For mutual fund investors, confidence their product will help them achieve financial goals is at 88 per cent and for ETF investors, confidence is at 91 per cent.
Both ETF and mutual fund investors say that inflation has had an impact on their investing with half saying they are investing less than usual.
