Mutual fund investors remain more likely to use advisors: survey

When it comes to purchasing mutual funds and ETFs, Canadian investors take different approaches for each vehicle, according to the 2021 Canadian Mutual Fund & Exchange-Traded Fund Investor Survey.

The survey — conducted by Pollara Strategic Insights and released by the Investment Funds Institute of Canada (IFIC) on Wednesday — found that 80% of people who had purchased mutual funds said they bought their last fund through “someone who provided advice and guidance,” up from 75% a year ago but down from the survey high of 90% in 2016.

In comparison, only 18% of that group reported buying their last mutual fund online or through a fund company representative (down from the survey high of 25% a year ago).

About half of ETF investors said they used a traditional advisor for their last purchase (49%), with another 49% using a robo-advisor, online brokerage or “another way.” That compared with 46% and 54% a year ago, respectively.

ETF investors who hadn’t used an advisor for their most recent purchase were more likely to have never done so. Nearly half of that group (46%) said they didn’t have advisor experience, while only 29% of mutual fund investors were in a similar boat.

Investors who used advisors were largely satisfied, much like in past years. Among mutual fund investors, 89% were either satisfied or completely satisfied with the advice they received (up from 84% in 2020). In the ETF space, 92% were satisfied or completely satisfied (down slightly from 95% in 2020).

The survey sounded notes of caution, however.

For example, only 78% of mutual fund investors said their advisor’s advice was worth the fees paid in 2021, down from 90% in 2020. Furthermore, a smaller percentage of that group was nervous about handling their own investments: 76%, down from 86% in 2020.

Among ETF investors, 76% felt their advisor’s advice was worth the fees, down from 91% in 2020. Like with mutual fund investors, a smaller group didn’t want to handle their own investments (71% versus 83% in 2020). And the percentage of ETF investors who felt they had better saving and investment habits because of their advisor was 70%, down from 84%.

Those changes did not seem to be directly attributable to the pandemic.

“Half of the investors stated their ability to save was not impacted by the pandemic,” the report said. “Those who were able to save more are planning to put the extra savings into investments.”

Furthermore, “both mutual fund and ETF investors are equally satisfied with all the methods of communicating with their advisor,” be those video conferencing, phone or face-to-face.

On fund fees and suitability conversations, results were mixed. Mutual fund investors indicated a dip in suitability discussions (only 86% said their advisor brought it up, down from 94% in 2020). The results were similar for ETF investors, at 82% compared with 93%. The majority of all investors (84%) said they discussed at least one aspect of fund fees.

“In the past three years, advisors are more likely to discuss fees associated with buying and selling mutual funds, with three-quarters (74%) reporting an advisor mentioned these fees, a small increase (1%) from 2020, but still significantly more than 2007 through to 2018,” the report said.

Research for the Pollara survey was conducted via phone interviews and online surveys. For the phone portions, 676 mutual fund investors and 232 ETF investors were polled between May 28 and June 23, 2021. Those sample sizes were smaller compared with previous years.