Advisors deliver satisfying results

Some 86% of Quebec residents say they receive good or great value for what their financial advisors charge, while 82% of survey participants in Atlantic Canada felt the same. In Ontario, the response was in line with the national average: 75% of survey participants agree with the those statements. Investors in Western Canada are slightly less pleased with their advisors – only 74% say they receive good or great value for what their advisors charge.

The IE Credo Financial Comfort Zone Survey is an initiative to gain insight into the relationships among financial advice, financial well-being and overall life satisfaction in Canadian society. Each year, 12,000 Canadians will be polled via online surveys conducted in French and English, and the results will be reported each quarter.

The survey’s broad approach to probing issues surrounding financial well-being reflects how advisors want to work with their clients, says Hugh Murphy, managing director of Credo Consulting, in that more and more advisors are taking a holistic approach to their clients’ affairs and are interested in knowing more about their clients than just numbers.

“Financial advisors want to understand Canadians because they need to deepen their conversations,” says Murphy, “So, the results of this will help [advisors understand and] deepen their conversations with clients.”

Although the survey found that 75% of survey participants are happy with the services rendered by their advisors, the level of satisfaction tends to vary with the level of investible assets.

For example, 81% of survey participants with investible assets of $1 million or more say they feel they received good or great value in the advice they received from their advisors.

Similarly, 81% of survey participants with $5,000 to $20,000 say the same – as do 80% of individuals with investible assets between $100,000 and $250,000. Yet, client satisfication drops off to 76% and 77% in the $250,000 to $500,000 and $500,000 to $1 million brackets, respectively.

This suggest that advisors could do more for clients, particularly those with mid-sized portfolios, says Sara Gilbert, founder of Strategist Business Development in Montreal.

For example, crafting a communication and marketing plan will help you speak with all your clients regularly, whether by phone or a newsletter, says Gilbert. This is a service that is likely to be particularly valued during times of market volatility.

However, the survey also uncovered some surprising data about client’s understanding of fees. Although the majority of survey participants understand that they pay for advisors’ services, a significant minority feel that they do not.

In response to the question, “How does your financial professional charge for their services,” 41% of Canadians say they pay their financial professional a set amount and 24% say they paid a fee for each trade made on their behalf.

However, 23% of survey participants say their advisor does not charge for his or her services.

More men (25%) say that their advisor does not charge for advice compared with 20% of women. Looking across Canada, 37% of Quebecers believe they receive investment advice for free – the highest of any region. Comparatively, only 16% of Canadians in Atlantic Canada said the same.

On the whole, the less investible assets a client holds, the more likely he or she is to say that advisors don’t charge for their services. For example, 28% of individuals with less than $5,000 in investible assets say they receive financial advice free of charge. Twenty-six per cent of individuals with $100,000 to $250,000 say the same. Conversely, only 18% of Canadians with $1 million or more in investible assets say their financial advisors do not charge for their services.

It’s common in the advice industry for clients with smaller portfolios not to understand the cost of advice because they are often placed into mutual funds, whose fees may not be obvious to clients, Gilbert says.

“That’s something that [the second phase of the client relationship model] CRM2 is changing,” she says.

When it comes to the well-heeled set, Gilbert says, advisors may mention their fees during initial conversations with their clients, but the clients, for one reason or another, don’t read their account statements.

The report’s results suggest that is likely the case. The survey indicates that Canadians with advisors are likely to look at their statements, but not read them in great detail. In contrast, individuals without an advisor are 1.4 times more likely to read their statements in great detail.

The onus is on the advisor to explain clearly to clients exactly how he or she compensated, Murphy says.

“Advisors are going to be the ones contextualizing the cost of advice,” he adds.

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