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The two largest investor demographics in retail markets — baby boomers, who are near or in retirement, and millennials, who are entering their peak earnings years — confront unique challenges in building and preserving their retirement savings. These investors face volatile and uncertain equity markets and persistently low interest rates that corrode investment returns. Further, the prolonged business lockdowns during the Covid-19 crisis have battered individual earnings and employment prospects, especially for millennials.

There is widespread evidence that access to quality investment advice and financial planning are critical to addressing these challenges. Indeed, many investor surveys, even before Covid-19 hit, indicated middle-income Canadians recognize the pressing need for financial advice and the importance of a financial plan to build their retirement savings.

The U.S. Securities Industry and Financial Markets Association commissioned a survey of individual investors representing 33 million households in the United States with $100,000 to $1 million in investable assets. The survey identified retirement planning as the primary service investors receive from their advisors and their most important goal. Two-thirds of investors said they prefer human interactions over technology, and 77% stated their advisor is worth the cost. Further, the survey indicated that investors are becoming more informed about the costs of investing, which has contributed to fee compression in asset and wealth management.

Similar surveys in Canada, like the IIROC-sponsored study “Enabling the Evolution of Advice in Canada,” reinforce many of these findings.

The Canadian retail wealth industry and investment dealer firms have responded to the growing demand for financial advice and planning in recent years, placing a strategic focus on widening access to financial advice and strengthening the quality of advice. Firms in the industry have re-structured and organized into different wealth platforms to segment client needs and preferences in order to achieve scale and efficiencies.

These platforms include “order execution only” (OEO) accounts, various forms of hybrid advice and the dedicated investment advisor relationship. These distinct platforms are often integrated into a single account or through separate affiliate firms. Account information and tools for financial planning and tax management are accessed digitally through mobile apps, computers and tablets. Since individual investors still prefer human interaction for advice, the hybrid platforms offer many technology applications to widen the scope of personal client-advisor interactions on cost-effective terms.

The quality of financial advice for Canadians, especially middle-income Canadians, has improved significantly. A major initiative has been the availability of cost-effective and innovative financial investments, such as debt and equity ETFs and other platform-traded products, and low-cost diversified mutual funds and other managed funds — including alternative investments like private equity — through fee-based and discretionary accounts. The level of professionalism has stepped up in terms of the knowledge, professional accreditation and capabilities of advisors and firms; better business practices driven by competitive pressures and higher regulatory standards of conduct in the advisor-client relationship; and greater transparency in the investment process and the fees charged by advisors.

Continued client-advisor communication is essential in a dynamic marketplace and amid clients’ changing priorities. Higher professional standards and regulatory requirements have resulted in easier and more frequent communication with clients. Moreover, advances in internet communication applications, such as Zoom, Cisco Webex and Microsoft Teams, have enabled cost-effective and convenient interaction between advisors and their clients, particularly in difficult market conditions. Finally, financial advice and planning is more often focused and tailored across different client profiles to improve the delivery and calibre of advice, planning and services. Advisors and firms are increasingly focusing on the content and delivery of financial services to a more diverse clientele in terms of gender, race and cultural background.

Much progress has been made in improving access to financial advice and the quality of financial advice for middle-class Canadians. Investors will continue to benefit as dealers and investment advisors adjust their practices and business models, introduce new client segmentation and tiered solutions, implement ongoing technology advances, offer new innovative investment products and respond to evolving client demands.

The relationship between boomers’ and millennials’ financial wealth and investment decisions are tightly intertwined and not as far apart on the risk spectrum as they used to be. Industry transformation and innovation will need to be an ongoing process for boomers to be comfortable and secure in their retirement and for millennials to have confidence in the investment industry to achieve their future goals.