Fewer Investors Use a Financial Advisor
October 25, 2023
Investors purchasing mutual funds use an investment advisor almost two thirds of the time. When purchasing ETFs, only one third use an investment advisor, writes Peter Watson.
This information is from the Investment Funds Institute of Canada’s annual investor survey that was recently released.
Why are so few investors using the services of a financial advisor? And why is there a downward trend in the use of a financial advisor?
One reason could be the number of investment firms that deal directly with investors as opposed to working through financial advisors. Many of those firms advertise heavily.
Plus, we are in the information age. People can easily investigate many subjects that are important including investments.
Despite having a satisfaction rate of over 90 per cent from investors that use their services, the reality is there are many options other than working with an investment advisor.
The study captured important information on fees. Investors that reported a higher level of satisfaction with their advisors did so when investment fees were discussed.
Investment fees included sales charges and management expense ratios. Plus, fees paid to the advisor’s firm.
My interpretation of this information is that an open discussion of fees is an important component of a trusted relationship.
The final component of the survey dealt with suitability. Almost 80 per cent of advisors explained how suitable an investment was in helping a client reach their financial objectives.
The business of investing is very competitive. The challenge for each investor to decide to have an advisor or invest on their own.
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com
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