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The Voice of Canada’s Investment Funds Industry

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Pira Kumarasamy
Senior Manager, Communications and Public Affairs

News Release

Mutual Fund Investors Recognize the Value of Financial Advice

Toronto, ON – September 15, 2016 – Research conducted by Pollara on behalf of The Investment Funds Institute of Canada (IFIC) demonstrates that Canadian mutual fund investors greatly value the advice that they receive from their financial advisors.

According to the 2016 Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry, confidence in financial advisors is strong, with 95 per cent of mutual fund investors indicating they can trust their advisor to provide them with sound advice and 88 per cent saying that they get better returns as a result of the advice they receive. Eighty-two per cent credit their advisor with helping them achieve better savings and investment habits, and 91per cent say they get value for the money they pay to their advisor.

“The high value that Canadian mutual fund investors place on advice is well-supported by empirical research that demonstrates the value advice delivers to investors,” says IFIC president and CEO, Paul C. Bourque.

Research recently released by the Center for Interuniversity Research and Analysis of Organizations (CIRANO) in Quebec found that, after controlling for a large number of variables, households that used a financial advisor accumulate considerably more wealth than those who do not, and that these benefits increase over time. After four years, the invested assets of advised households were 1.9 times greater than those that were unadvised.  After 15 years, households with an advisor accumulated 3.9 times more wealth than unadvised households.

“It is important for public policy-makers and regulators to respect the confidence Canadian investors have in the benefits of financial advice and to protect investor access to advice, regardless of account size,” Bourque states. “This means ensuring that our regulatory framework continues to make investment opportunities and access to advice available to all Canadians at competitive prices.”

The current market gives consumers choices about how they access and pay for savings products and advice. The Pollara research found that mutual fund investors prefer to have choice when it comes to payment options. Just over half (54%) would prefer to compensate their advisor through bundled fees, while 37% would prefer to pay a direct fee.

This year, mutual fund investors report increased awareness of the fees and compensation they pay to their advisors. Clients who recall discussing fees and commissions with their advisor rose six points to 62%. Clients who recall discussing compensation rose eight points and those who recall discussing MERs rose four points.

Other highlights of the 2016 Pollara survey include:

  • 86 per cent of mutual fund investors say funds will help them meet their financial goals. Fewer express confidence in stocks (64 per cent), GICs (59 per cent) and bonds (51 per cent).
  • The vast majority (90 per cent) of respondents say their advisor discussed the suitability of their chosen product relative to their individual investment goals.
  • One-half of investors say retirement funding is their primary motivation for investing in mutual funds and an additional 14% say their mutual funds are intended to augment their income at retirement or later in life.
  • Canadian mutual fund investors remain somewhat cautious about purchasing mutual funds through alternative channels, with just 17% indicating they would be comfortable purchasing investment products through automated advice.

The 2016 Pollara research report was based on 1,000 telephone interviews with mutual fund holders 18 years of age or older who make all or some of the decisions regarding mutual fund purchases in their household. About half of those surveyed had less than $25,000 to invest when they first started using an advisor. A third of respondents had less than $10,000. This is the 11th year that POLLARA has conducted the survey on behalf of IFIC.

“Canadian mutual fund investors have consistently expressed strong confidence in the ability of mutual funds to meet their goals, more than any other financial product. There is no other product that offers the same degree of opportunity, flexibility and protection to investors,” notes Bourque.

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, 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 funds industry and its investors for more than 50 years.

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For more information:
Sara Clodman, Senior Manager, Public Affairs | 416-309-2317