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. “
