A survey into how much advice some investors receive indicates that in many cases, basic financial planning concepts are not addressed, states a report from the Ontario Securities Commission’s Investor Advisory Panel.
In releasing the report July 29, the panel said nearly one-third of the 3,000 small- and mass-market investors surveyed were unable to say their advisor ever talked to them about concepts like planning for retirement, education or saving for a home. More than half reported only infrequent and brief communication or no communication at all from their advisor over the past year. These investors do say though that they get some information about important investment topics.
Results raise significant questions
“The survey results raise significant questions about whether most small and mass-market investors actually have access to advice that is comprehensive and timely enough to effectively meet their needs, even though they pay for it – often through embedded compensation schemes, such as trailing commissions, that have been shown to create harmful conflicts of interest,” said the report.
In addition, 60% of mass-market investors and 75% of investors with small portfolios reported that their advisor communicated with them only once or twice in the past year – or not at all.
Advisors spend little time with clients, according to survey
Nearly half (49%) of these investors said their advisor spent less than an hour, in total, communicating with them during the past year or didn’t communicate at all. Two-thirds (68%) of small investors and 44% of mass-affluent investors said the same thing.
Panel chair Neil Gross said he hopes the data will help policymakers assess the potential impact of banning the use of trailing commissions.
“We wanted to see just how much advice small and mass-market investors actually get so we could better understand what's actually at risk if – as is sometimes asserted – a ban might result in those investors losing access to the advice they currently receive,” said Gross.