Understanding Good Financial Advice

Advice often transactional
Major life events should be cause to proactively seek financial advice and should also prompt Canadians to prepare financially and make decisions about what to do with their money. However, few Canadians foresee seeking investment advice when faced with significant life events – even if receiving an inheritance or facing retirement. What we see is that many Canadians are focused more often on the short term and this is reflected in their decisions about investing. What would prompt Canadians to begin investing? Most often it is having extra money that they don’t need for another purpose.
  • Life Events Rarely Encourage Canadians to Seek Financial Advice...

    We might expect that a major life event would prompt people to ask for professional financial advice. But when asked about a variety of potential events including retiring or receiving an inheritance, only a small segment of Canadians could anticipate that these would cause them to seek advice. Perhaps part of the problem is that about half (51%) of Canadians describe themselves as more focused on shorter term needs rather than longer term goals (10+ years in the future).

    • 14%
    • 18%
    • 17%
    • 8%
    • 7%
    • 8%
    • 30%
  • …And Rarely Prompt Them to Begin Investing

    What prompts Canadians to begin investing? Definitely not life events. With the exception of the 32% who felt that the decision to invest might be made if they were to receive an inheritance, far fewer could foresee any other event that would be a catalyst to invest.

    • 12%
    • 12%
    • 10%
    • 3%
    • 16%
    • 10%
    • 32%
  • Lacking Confidence

    Those Canadians who are ‘savers only’ say that investing in securities (e.g. stocks, bonds, mutual funds or other securities) would more often occur if they had ‘extra’ money (56%), if they could start with very little money (35%) or if there was someone they trusted to advise them (26%).

    • 56%
    • 26%
    • 19%
    • 35%

Lost in Transaction

38% of Canadians say they use professional financial advisors, while an equal proportion (41%) have never used an advisor. But even those using advisors often appear to seek advice to address particular needs in the moment, rather than as an aid to help them plan for their life long needs. Prevailing attitudes towards investing may help explain this one-transaction-at-a-time mentality. For instance, 36% of Canadians do not agree that they "take financial planning seriously,” while 51% say they are more focused on shorter term goals rather than longer term ones.

The “Big 6” vs. all the others

Canadians young and old are routinely using online sources to make long-term financial decisions but the country’s biggest banks are still the primary go-to for those who use a professional financial advisor. 43% of Canadians say they use bank branch advisors while 19% get their advice at a bank-associated full service brokerage firm.

Stay Involved

It’s important that investors seeking professional advice understand what their financial advisor offers and whether this relationship can help them achieve the financial future they desire.

Think Big Picture

Focus less on short term needs when seeking advice and more on longer term goals and key life events that may have a profound impact on your financial health.

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Do Your Homework

There are no shortages of ways to obtain financial advice in Canada. Do some research first through family and friends, online and other resources and shop around to make sure your advisor is right for you.

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Go for Regular Checkups

Enough with the mad dash visit to the bank during RRSP season each year. Think ahead and book some time with your financial advisor to review your long-term financial plan on a more regular basis.

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