What we learned from the 2017 CSA Investor Index

Fewer clients are checking up on their advisors, finds the 2017 CSA Investor Index.

Of those Canadians who use financial advisors, 29% checked their backgrounds, down from 38% in 2012.

That lack of research could be because, overall, investors’ comfort levels with their advisors remain steady, reveals the index. However, fewer respondents say they’re “very comfortable” bringing their concerns and questions to their advisors compared to previous surveys (50% in 2017 versus 60% in 2012).

Most investors who checked their advisors’ backgrounds relied on the Internet (16%) or the bank (9%). Only 4% checked with provincial regulators.

On the bright side, clients are more optimistic now than in 2012, with 53% expecting to achieve their investment targets over the next year, compared with 39% five years ago.

Client/advisor misses

Optimism might be misplaced, however: half of respondents (51%) failed the general investment knowledge test included with the survey.

Further, one in four respondents say they don’t know how their advisor is paid.

A plurality (35%) say their adviser is paid by salary, and about one-quarter say by commission (26%) or with a flat fee based on assets (23%).

This is despite the finding that, unaided, 72% of respondents say they received an annual statement covering fees and performance. Almost half (48%) who report receiving their CRM2 statements heard about these reports from their advisors; 40% had heard nothing about the change.

And, while advised investors are more likely to have written financial plans with clear goals (55%) compared to Canadian investors overall (27%), that still leaves 45% of clients without written plans.

Popularity of robos, social media

Only 9% of Canadian investors currently have an account with an online platform, and just 16% of Canadians are familiar with automated online investing services.

But the survey finds that online platforms are gaining popularity, with 23% of respondents likely to use one if they open a new account or move an existing one.

More popular than online investing, however, is social media use. More Canadians (43%) use some form of social media for investing information, up from 35% in 2012. Specifically, Facebook (22% in 2017 versus 16% in 2012) and YouTube (20% in 2017 versus 14% in 2012) saw the largest increases.

For more details, including sections on fraud and return expectations, read the full 2017 CSA Investor Index.

About the survey: Innovative Research Group interviewed 7,271 Canadian adults online between Aug. 28 and Oct. 2, 2017. The online sample was weighted by age, gender and province or territory using 2016 census data.