The Investment Funds Institute of Canada (IFIC) published a report summarizing a number of different research efforts, across countries, which measure the value of advice to investors.
In Canada, retail investments, including funds, managed accounts and securities holdings account for more than $4.7-trillion, held across 16.5-million households. Of this, they say approximately 71 per cent is advised.
The report, Financial Advice in Canada, states that there are 108,033 retail advisors in Canada advising clients with wealth totalling $3.345-trillion.
“In 2017, IFIC commissioned the Brondesbury Group to explore how investors themselves understand advice,” IFIC’s researchers write. “The report found that financial services clients understand advice to be personalized communication that responds to specific questions and concerns, in the context of an ongoing trusting relationship.”
It goes on to summarize research from the Institute of Certified Financial Planners, the Investment Industry Regulatory Organization of Canada (IIROC) and Pollara which all indicate that Canadians have extremely high levels of trust for their financial advisors.
They add that there is a substantial and growing body of research demonstrating a measurable, quantitative value of financial advice, and summarizes five studies. In Canada alone, four studies show that Canadians using a financial advisor accumulated substantially more assets than their non-advised peers. The report also looks at research from the United Kingdom, the United States and Australia.
They say the demand for advice will intensify in the years ahead, while the nature of advice will undergo changes over the course of the next decade, as well. “We are only at the beginning of technological disruption in the wealth management industry,” they write.
For advice to be effective, however, IFIC concludes saying “it will have to be personalized and capable of answering clients’ very specific questions and concerns and be founded on a trusting relationship.”