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The Voice of Canada’s Investment Funds Industry

News Release

Confidence In Funds Remains High; Investors Seek Fee Payment Options

Toronto – October 7, 2014 – For the ninth year in a row, research conducted by Pollara on behalf of The Investment Funds Institute of Canada (IFIC) shows mutual funds lead the way when it comes to investor confidence. The 2014 Canadian Investors Perceptions Of Mutual Funds And The Mutual Fund Industry survey also confirmed that investors are looking for choice when it comes to paying for advice.

The Pollara survey asked mutual fund owners to rank their confidence in the ability of various financial  products  to help them achieve their financial goals.

“Again this year, Canadian mutual fund investors have expressed higher confidence in the ability of mutual funds to achieve their financial goals than in other products tested,” said IFIC president and CEO, Joanne De Laurentiis.  “Confidence in mutual funds has continued to improve steadily since 2009, and is now again in line with the confidence levels of 2006.” In the 2014 survey, mutual funds achieved an 85% confidence level compared with 65% for stocks, 64% for GICs, 55% for bonds, and 34% for ETFs.

Confidence in advisors also remains high with 98% of those surveyed agreeing that they trust their advisors to give them sound advice and 92% that they obtain better returns than they would if investing on their own.

For the second year, respondents were asked their views on different options when it comes to paying for advice. The survey found 54% support the prevalent Canadian model of paying through embedded fees, while 38% would prefer a direct payment to the advisor. This represents a slight shift since last year towards a preference for embedded fees. However, when asked about the likelihood of staying with their advisor if direct payment resulted in a higher cost to the investor, only 18% indicated they would be very likely or certain to continue.

“Studies by CIRANO and the Conference Board of Canada have demonstrated the positive impact of financial advice on investor savings, and on Canada’s long-term economic well-being. Any policy discussion that has the potential to limit payment options needs to take these findings about investor preferences into account,” said De Laurentiis.

New this year, were questions on how investors rate their advisor’s understanding of their risk tolerance. Nearly all (95%) mutual fund investors say that they discussed their comfort level with investment risk with their advisor and agreed that they were satisfied with their advisor’s original and ongoing understanding of their risk tolerance.

“Investor satisfaction with advisors’ understanding of their appetite for risk is also reflected in investors’ consistently high levels of satisfaction with the advice they receive, said De Laurentiis. “This number has steadily increased since 2009 and may be the result of the ever increasing focus on disclosure.”

“Investor confidence and satisfaction are complex concepts that can be impacted by markets, by returns, and by regulators,” said De Laurentiis. “But most of all, they are driven by the quality of clients’ relationships with their advisors and the savings they are able to build. That is why the industry is eager to successfully introduce the new disclosure regime known as CRM2. We believe that the new rules will further enhance advisor/client conversations and support investor confidence.”

The complete 2014 Pollara Survey is available on the IFIC website.

To view a guide to the CIRANO research, click here.

To view the Conference Board of Canada research, click here.

About IFIC

The Investment Funds Institute of Canada is the voice of Canada’s investment funds industry. IFIC brings together 150 organizations, including fund managers and distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. By connecting Canada’s savers to Canada’s economy, our industry contributes significantly to Canadian economic growth and job creation. The organization is proud to have served Canada’s mutual fund industry and its investors for more than 50 years.

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For more information:

Sara Clodman  │ 416-309-2317