Canadian financial advisors are “remarkably attuned” to changes across a wide range of broad economic indicators – from GDP and inflation to employment and housing prices – according to five years of data from the Advocis Financial Advisors Index (FAI) compiled by Western University and Advocis, the Financial Advisors Association of Canada.
"Our analysis revealed intriguing and statistically robust correlations," said Dr. Matt Davison, Dean of Science at Western University in a statement released Feb. 13. "The results exceeded our expectations and renewed our confidence in the value of the Financial Advisors Index as a solid, statistical indicator for the Canadian economy and corresponding investor behaviour."
A monthly survey of 1,000 advisors
Launched in 2013, the FAI is a monthly survey of 1,000 Canadian financial advisors that measures advisor confidence, defined as the degree of optimism about the state of the economy. The analysis assessed this data against 20 general economic indicators over the same period. It found more than 190 data points with strong correlations between the FAI survey and general economic indicators, as well as over 60 data points with strong causation values.
Advisors have a unique vantage point
"While academic studies have consistently shown that those who receive financial advice accumulate more wealth than those who don't, the FAI data demonstrates that financial advisors have a unique vantage point on the overall direction of the economy," said Greg Pollock, President of Advocis. "Amid all the speculation about the impact of robo-advisors on our industry, these findings demonstrate that financial advisors offer the advantage of seeing the bigger economic picture when helping their clients plan for their future financial well-being."
"From its inception, we were hopeful that Financial Advisors Index would prove to be a reliable economic benchmark," said Chuck Grace, Finance Faculty, Ivey Business School, at Western University. "We knew that professional advisors meet with hundreds, even thousands, of clients every year and because of that they have a unique insight into how Canadians are reacting to the economy in real time. To see that hypothesis confirmed in the numbers is very exciting."