Younger Canadians also seeking advice

(August 12, 2005) It’s a demographic that is sometimes overlooked by advisors, but new research suggests it may be a mistake to ignore young Canadians. In fact, most Canadians who are going to use a financial advisor will do so by the time they are 30, according to Environics.

While that doesn’t mean clients won’t switch advisors down the road or add a secondary advisor if the need arises, the survey indicates that Canadians often find they need guidance for major life events that usually happen at a young age, such as starting a family or buying a first home.

“Enlisting the services of a financial advisor is often driven by an individual’s increasingly complex financial situation,” Environics says, as younger Canadians find they have more disposable income and need to plan for the future.

“By age 30, it appears that many Canadians have found that their financial situation is complex enough that they require advice.”

Only 26% of Canadians aged 18-29 have an advisor, the study reveals. But after that, the numbers begin to stabilize, ranging from 46% of those between 30 and 44 and 48% of those 60 or older. The average is 43%.

The ongoing study of more than 2,000 Canadians, conducted earlier this summer, also reveals that those numbers tend to rise with household income. For example, 59% of households whose annual income exceeds $80,000 have an advisor.

Canadians are generally satisfied with their advisor, but those with higher incomes tend to be harder to please. Overall, 61% said they were satisfied with the quality of advice, but that number drops to 55% for those with household incomes above $80,000.

“This change in satisfaction appears to be related to day-to-day service matters,” Environics says. “The availability of the advisor, responsiveness in terms of quick and effective issue resolution, and effective communication have all seen significantly decreased levels of strong agreement over the past year, especially among Canadians with household incomes of $80,000 or more.

“Advisors that make a concerted effort to address these tactical matters position themselves effectively to satisfy their clients.”

Declines in satisfaction and trust among high income households are of particular concern to advisors, Environics notes, considering they have occurred during a substantial market rally.

“Environics infers from these recent findings that financial advisors remain under increasing pressure from clients. The expectations of investors continue to challenge advisors’ abilities to deliver satisfaction.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com