The Value of Advice: Report July 2010

Investment Funds Institute of Canada

Here’s a brief summary of the main findings:

“In this Report we have looked at the financial and investment advice business…and identified some of the principal values that investors derive from the relationships they have with their advisors….

• Most Canadians find that they lack the financial knowledge, or the time required, to research all the options available to them
• Advisors help their clients make the important financial decisions they need to make at critical points in their lifetimes (see chart below)
• Advisors assist in the setting of planning targets; the choice of the right vehicles to reach those targets; and the development of asset allocations matched to client needs
• Having advice is strongly associated with the accumulation of financial wealth regardless of income level or age of household
• Advised households save more, regardless of income and age, than their non-advised peers
• Advisors help choose the right asset mix for an individual client’s circumstances, objectives, and risk tolerance
• Advisors help their clients to adopt good savings and investment behaviors early in life and to maintain those practices through their lifetimes
• Advised investors are more confident about their future than non-advised households
• Investors who work with an advisor are 33% more likely to feel empowered and educated than those who invest without advice
• Investors using advisors are much less likely to be the targets of fraud than those who do not use advice
• When times get tough, individuals trust their advisors for financial advice - even on financial questions outside of their immediate business relationship
• Advisors provide highly durable values, such as the values learned about adopting early in life a savings and investment culture, avoiding common behavioral investment errors, and understanding the benefits of a financial plan. “