Canada's Big 5 are missing out on financial advice opportunity

A conclusive 85% of Canadian consumers are interested in receiving financial advice from their primary bank but the Big 5 banks are failing to realize the potential.

A new survey from J.D. Power shows that 72% of bank customers will act on the advice they receive but satisfaction has dropped 2 points year-over-year in 2019 to a score of 789 out of 1000.

Younger customers are more likely to be dissatisfied with their banks’ financial advice. This sharply contrasts with J.D. Power’s survey of retail bank customers in the United States, where there was a 15 point increase in satisfaction, largely due to younger customers.

“There is clear demand for financial advice among Canadian bank retail customers, and when banks get the formula right, that advice drives significant customer loyalty and advocacy, but many banks are still missing the mark,” said Paul McAdam, Senior Director of the Banking Practice at J.D. Power. “Increasingly, all signs are pointing to digital advice offerings as the channel where retail banks can drive the most significant improvement. Nearly 60% of customers indicate they’d like to receive advice via digital channels, but just 10% of them actually receive advice that way.”

Investment advice most sought
Respondents to the J.D. Power 2019 Canada Retail Banking Advice Study said that investment-related advice is the most sought financial advice (49%).

This is followed by quick tips to help improve their financial situation (44%); retirement-related advice (44%); advice to help keep track of spending and household budgets (34%); and in-depth view of personal financial situation (32%).

Digital content is the most desired way of receiving advice, including interactive tools, videos, and articles. A mobile app or bank website are the preferred platforms, but just 10% said they received this kind of content.

Good advice builds trust
The survey found that the banks that score highest for customer satisfaction with financial advice are more likely to have high levels of trust among satisfied customers.

These customers are loyal with 86% saying they would definitely use their bank for another product, 76% are Net Promoters, and 49% have opened another account with their bank based on advice received.

How the banks rank
Scotiabank ranks highest in customer satisfaction with retail banking advice with a score of 806. RBC Royal Bank ranks second with a score of 803 and BMO Bank of Montreal ranks third with a score of 792.

"This is an incredible honour. We put our customers first every day, striving to deliver exceptional customer experiences and meaningful advice that helps them reach their financial goals,” said John Doig, Executive Vice President, Retail Distribution, Scotiabank. “Over the past few years, we've deepened our investments in coaching support for our Advisors, improving the customer experience at every touch point and building customer relationships that are centred on trust. Coupled with our leading lineup of investment products, Scotiabank is proud to be the bank our customers come to for great advice and great solutions."