Despite the growth of self-directed investing platforms, professionals are in demand
If you had to make a guess at which cohort of self-directed investors would be the least likely to seek guidance from a financial advisor, you might assume it would be the tech-savvy Gen Zs.
But it’s these younger investors that are more receptive to being advised by a human wealth professional than older generations, according to a new Canada Investor Satisfaction Survey from JD Power.
Although investors across generations said they value the simplicity of managing their own investments (45%) or that their investments are small enough to manage themselves, when engaging with wealth management firms they value ease of doing business (16%) behind trust (20%) and people (19%) as the foundation for a positive investor experience.
The firm’s research found that 39% of Gen Zs said they are likely to engage with an advisor in the next 12 months, compared to 38% of Millennials, 26% of GenXers, and just 20% of Boomers. Overall, around one third of the DIY investors polled said they would seek advice.
But while the demand is there from young investors, the report warns that supply may be lacking, with Canada’s traditional wealth management firms tailored towards older generations and potentially alienating a lucrative inflow of younger clients.
Kapil Vora, senior director of wealth intelligence at JD Power, explained that younger investors feel there is not enough information available online to gain the investment expertise they need to be successful.
“This underscores the essential need for accessible and thorough education and guidance, illustrating that technology alone is insufficient to bridge the gap between information and genuine investment confidence,” Vora said.
The percentage of investors younger than 40 is just 20% at traditional wealth management firms vs. 48% at fintech firms and 28% at banks, highlighting the potential for traditional firms to grow market share if they can increase engagement with younger generations.
Among the firms who are doing well, National Bank Financial ranks highest in overall satisfaction among advised investors, with a score of 730 (on a 1,000-point scale) followed by Edward Jones (696) and iA Private Wealth (692) ranks third.
Wealthsimple ranks highest in overall satisfaction among DIY investors, with a score of 727, followed by Dejardins Online Brokerage (Disnat) (655) and Questrade (644).
