CRM2 may have been out for more than a year now, but 79% of Canadian investors are still unaware of the new reporting and disclosure rules affecting mutual funds, according to J.D. Power’s 2018 Canadian Full Service Investor Satisfaction Study.
Even among those investors who are aware of CRM2, not even half of them have actually noticed the changes in the reporting itself, cited the report.
“The low awareness and understanding of CRM2 poses an ongoing challenge and opportunity for firms and financial advisors,” said Mike Foy, senior director of the Wealth Management Practice at J.D. Power. “While the industry’s concern that the new fee and performance reporting would trigger an exodus of investors hasn’t materialized, the risk of defections still exists. The study suggests that the best way to address that risk is for advisors to be proactively and regularly discussing fees and performance with their clients, rather than leaving them to figure it out on their own.”
Advisors who talk with clients about CRM2 more likely to stay with them
The study shows that investors who have noticed the change in reporting and whose advisors have talked to them about their fees are more likely to remain with their advisory firm and more likely to recommend that firm to others.
“Advisors continue to be critical of CRM2 achieving goals of greater investor understanding of fees and performance,” Foy said. “The greater risk for both advisors and firms remains with inaction rather than taking action to engage with clients.”
The study also points to the evolving role of the advisor. About 15% of Baby Boomers let their financial advisors make all their decisions, while only about 10% of Millennials do the same. Some 39% of Millennials use their advisor as a sounding board for their own ideas, compared with 24% of Boomers.
The survey said that 77% of investors have not used or have only tried using their wealth management mobile app once, a very low adoption rate. And for those who have used the mobile channel rate the experience is significantly lower when compared to other channels, such as online or the phone.
In addition, the study noted that while Boomers, Gen-Xers and Millennials are all aware of robo advisors, especially to save fees, Millennials are much more likely to adopt the technology.