Pollara study points to benefits of improved disclosure
Toronto, ON – November 22, 2017 – On the heels of new requirements to deliver personalized cost and performance reporting, investor awareness of fees and investment returns appear to be on the rise according to a survey of mutual fund investors conducted annually by Pollara for The Investment Funds Institute of Canada (IFIC). The 2017 survey, Canadian Mutual Fund Investors’ Perceptions of Mutual Funds and the Mutual Funds Industry, found increased investor knowledge of fees, increases in investor recall of advisor-initiated discussion of fees and compensation, and positive assessments of the way performance information is provided in the new statements.
“We know that the process of changing behaviours takes time, said Paul C. Bourque, president and CEO, IFIC. “Whether because of CRM2 or other factors, Pollara’s findings are encouraging in that they show steady increases in several measures that point to higher levels of investor knowledge and engagement. These increases are consistent with improvements that the BC Securities Commission identified in their research.”
The survey found that investor awareness of the fees they pay go to their dealer and advisor has risen considerably over the past three years. Among those who purchased a mutual fund through an advisor in the past year, awareness jumped from 72% in 2015 to 85% in 2017, while awareness by all mutual fund investors rose from 69% in 2015 to 78% in 2017.
At the same time, client recall of advisors initiating conversations about fees and commissions is also on the rise – up 12 points from 2015 (58%) to 2017 (70%) for those investors who purchased a mutual fund from an advisor in the past year. “While surveys can’t identify the cause of changes in advisor behaviour, the Pollara findings indicate that advisors are spending more time making clients aware of the fees that they pay. Higher levels of advisor and investor engagement are key to improving overall investor protection,” said Bourque.
Pollara also asked mutual fund investors about their awareness of and interest in using online and automated services (robo-advice services). Notwithstanding the considerable media attention given to robo-advice, only one in five of all respondents were aware of these services. Of the 20% who had some awareness, only 19% of those (4% of all respondents) felt they were likely to use the service. “The industry, governments and regulators are putting considerable thought into how digital tools can improve the investor experience. The Pollara results tell us that stakeholders have considerable work ahead of them to educate and inform investors about digital investing,” said Bourque.
- Four in ten investors made new purchases within the past year – 85% of which were made through an advisor.
- Trust in advisors saw a significant increase (up 8 pts) in the proportion who strongly agree that their advisor gives them better returns on investment and improves their savings habits.
- While there is reported high awareness of having received a statement, there was little awareness that it contained new information.
- 82% of investors agreed that their statements provide them with all the information they need
- 86% said that their statements clearly show the rate of return.
- 50% said that their statements clearly show the fees paid they pay to their advisor’s firm (Pollara notes that this may be a result of respondents confusing annual statements with monthly or quarterly which do not report fees).
About the Pollara Survey
The 2017 Pollara research report Canadian Mutual Fund Investors’ Perceptions of Mutual Funds and the Mutual Funds Industry 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. All interviews were conducted between July 11 and July 25, 2017. This is the 12th year that Pollara has conducted the survey on behalf of 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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Sara Clodman, Senior Manager, Public Affairs: email@example.com 416-309-2317