client meeting

Nine in 10 clients are satisfied with their financial advisors, but the perceived value of advice remains lower than it was in the first year of the pandemic.

So finds the 17th annual Canadian Mutual Fund and ETF Investor Survey, conducted by Pollara Strategic Insights and commissioned by the Investment Funds Institute of Canada.

Investment returns were rated the most important driver of satisfaction with advisors among both mutual fund and ETF investors, but client peace of mind was second most important. Clients “really do want to have that trusted relationship as well,” said Lesli Martin, senior vice-president of public affairs with Pollara Strategic Insights.

The perceived value of advice differed between mutual fund investors and ETF investors.

Eighty-one percent of mutual fund investors agreed that their advice was worth the fees in 2022, up from 79% the year prior but still down from 90% in 2020. Among ETF investors, 78% agreed their advice was worth the fees this year, rebounding from 69% in 2021 but still down dramatically from 91% in 2020.

Martin suggested the disparity in value perception from 2020 could be related to market performance and the challenges with client/advisor meetings posed by the pandemic.

Mutual fund investors were also more likely to believe that they get a better return on investment when using an advisor (80% in agreement) than ETF investors (73% in agreement).

Satisfaction with advisors was also different between the two types of investors. Ninety-two percent of mutual fund investors said they were satisfied with their advisors in 2022, the same as in 2021. But satisfaction fell to 92% from 97% among ETF investors over the same period.

Use of advisors for the most recent fund purchase declined in 2022 from 2021 for both ETF and mutual fund investors (by six and five percentage points, respectively). In the case of ETFs, online brokerages were the most dominant channel of purchase.

The Pollara survey also found that investors say they understand the fees they pay to their advisor’s or dealer’s firm. For both mutual fund and ETF investors, the proportion of investors who reported that their annual statements clearly show their fees increased by 19 percentage points between 2018 and 2022. Slightly more ETF investors (75%, vs. 72% of mutual fund investors) said the fees were presented clearly.

However, the proportion of investors who said the fees were presented clearly fell by five points between 2021 and 2022 for both ETF and mutual fund investors.

According to a financial literacy survey conducted by the Ontario Securities Commission’s Investor Office last year, investment costs was the topic with the fewest correct answers. Previous research from the OSC has found that many investors don’t understand what they’re paying based on their annual fee reports.

Interviews with mutual fund investors (4,045) and ETF investors (1,503) were conducted online between May 31 and June 15. A margin of error cannot be assigned to online surveys.