Are financial advisors worth it?

Increased focus on costs, value

New regulations under “CRM 2” are being introduced around cost disclosure, and by preparing now, you can be positioned for success. By 2016, your clients will be receiving a set of new annual statements that shows them what they paid and what they made.

Read a concise summary of the regulatory initiatives.

With increased awareness of costs, there may be questions about the value of your services. Common sense supports the value that financial advisors bring to Canadians, and the research confirms it. We can provide you with advanced educational tools to promote your value proposition in the evolving regulatory environment.

Research quantifies advisor value

According to a groundbreaking research study, the answer is a resounding yes. Advised households have approximately twice the level of financial assets as their non-advised counterparts, and this advantage grows over time. Canadians who rely on advice to guide their financial decisions are wealthier, more confident and better prepared for the financial implications of marriage, a new child, their children’s education, retirement and other life events.

The study, carried out by the Montreal-based Centre for Interuniversity Research and Analysis on Organizations (CIRANO), shows that advisors positively affect the level of wealth of Canadian households. Professor Claude Montmarquette and Nathalie Viennot Briot used econometric modelling techniques on a very robust sample of Canadian households. Their analysis showed that financial advisors contribute significantly to the accumulation of financial wealth. After controlling for a host of socio-economic, demographic, and attitudinal variables that can affect wealth, the research indicates that the advice advantage is largely attributed to a greater savings discipline.

The CIRANO research further shows that having advice positively impacts retirement readiness and is an important contributor to levels of trust, satisfaction and confidence in financial advisors, which are strong indicators of the value of advice.

Graphic demonstrating value of advice over 15 years

Source: An econometric analysis of the value of advice in Canada, by Claude Montmarquette, CIRANO, 2012

Reference: The Investment Funds Institute of Canada Value of Advice Report 2012