Fewer Canadians working with financial professionals, survey concludes

(September 9, 2003) The number of Canadians using the services of a financial professional to help manage their money appears to be on the decline. A consumer survey released today by the Financial Planners Standards Council (FPSC) reveals that 39% of Canadians are currently working with a financial professional, compared to 49% when the same question was asked four years ago.

Similarly, the number of Canadians who said they have at some point used a financial professional fell from 60% in 1999 to 53% in 2003.

Most of the decline came in the 40 to 49 age group, with only one in four currently using a financial professional. That figure rises to 44% for those aged 50 or older and to 64% for households with incomes of $100,000 or more.

The number of younger Canadians (18 to 29 years) who use a financial professional doubled from just 8% in 1999 to 16% in 2003. And 21% of those under 40 years old who didn’t use a financial professional said they planned to do so within the next year.

That suggests a future growth opportunity for advisors, says FPSC vice-president Ann Bowman. “When they start to have more resources and when their financial affairs become more complex, they definitely will be seeking the advice of a financial planning professional,” she told Advisor.ca. “They believe in the importance of managing their financial affairs.”

The financial professionals used most often by Canadians are those working with a financial planning or independent firm (33%) and those at financial institutions, such as a bank or trust company (26%).

Bowman says the FPSC purposely avoided using the term “financial planner” in the survey because she says it’s not completely understood by the Canadian public.

Canadians who do work with financial professionals indicated a high degree of satisfaction with the relationship. Nearly 80% gave their advisor at least a seven out of 10 rating on issues such as reviewing financial plans, personal contact, providing unbiased advice and understanding goals and objectives.

Bowman notes that service and advice issues were the most frequent reasons cited for continuing to work with a financial professional. “Canadians judge financial professionals on service issues as opposed to the performance of their investment portfolio,” she says.” And that’s been consistent. It was true in 1999 as well.”

In 1999, nearly half of Canadians said financial professionals could increase their value by providing clearer explanations of financial topics. That declined in importance to just 9% this year. “Hopefully that means planners are now doing what their clients wanted them to do which is explaining things more thoroughly,” Bowman says.

The survey also suggests continuing confusion over regulation of the financial advice sector. Nearly two-thirds of those questioned believe that individuals calling themselves financial planners must be licensed or regulated.

About three-quarters of respondents said it was important for financial professionals to obtain some kind of designation, although only 16% could name the CFP, the most frequently cited designation.

“We still have some work cut out for us,” Bowman says. “Many Canadians don’t know enough about the CFP designation and we’re working hard to change that.”

Seven hundred and fifty Canadians, aged 18 to 75, took part in the phone poll, conducted by Lynn Gordon Research, in April and May of this year. The survey has a 3.5% margin of error.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca