Amid myriad regulatory proposals, criticism for sales tactics at banks and a potential shakeup of financial services in Ontario, some in the industry are moving ahead with investor education instead of waiting to see where the chips fall.
That’s probably wise, considering research shows many investors don’t know, for example, what they pay in fees. A survey published in a newsletter by ATB Investor Services finds that only 46% of Albertan investors are aware that they pay fees at all.
And things might not be much better for those who say they’re familiar with their fees: 39% believe fees have a big impact on returns, 31% say fees have little impact on returns and 30% say fees have some impact. Whether those disparate responses accurately reflect the investors’ portfolios isn’t clear.
Further, 61% of Albertan investors aren’t aware of the intent or significance of CRM2.
ATB provides education on its website, suggesting that investors pose four critical questions to their advisors:
- What is your obligation to act in my best interest?
- How are you compensated?
- How will I be charged?
- What is your investment philosophy?
Also helpful is a video series comparing paying fees to paying for an airline flight. (“When you pay for an airline ticket, you pay for a number of built-in service fees along with the flight. Investments also have built-in fees.”)
For its part, Advocis’ television ad campaign launches today to tell investors that a ban on embedded commissions could limit their access to financial advice (“proposed government regulations are putting your financial security at risk”). That’s in sharp contrast to CARP, which has a petition on its website to urge an embedded fee ban, as well as government action on a best interest standard. (Last week, CSA announced only Ontario and New Brunswick would keep working on a best interest standard.)
Readers: Are you an Advocis member? Do you agree or disagree with your association’s position? Email us.
The ATB survey involved 1,004 participants. Results are considered accurate to within +/- 3.5 percentage points. See the ATB newsletter with the survey results.