IIROC poll reveals perceptions on regulation of investment advice, as well as apparent gaps in confidence
The majority of current investors and aspiring investors in Canada agree that getting investment advice from a regulated firm or individual is important, according to a new national poll by the Investment Industry Regulatory Organization of Canada (IIROC).
The national survey, conducted with The Strategic Counsel, asked more than 1,500 current investors and more than 500 aspiring investors to weigh in on factors that they believe affect their access to investment advice and services.
Among the respondents, 87% of current investors, as well as 67% of aspiring investors, felt it’s important that advice come from a regulated firm or individual.
There appeared to be a gap in perception of regulation, with current investors being more likely to say they are confident that Canada’s investment industry is properly regulated (76%) than aspiring investors (48%).
“It is encouraging that most Canadian investors are confident that the investment industry in Canada is properly regulated, although it is concerning that those who are not yet investing are far less confident,” said Kathy Engle, vice president, Strategy at IIROC, said in a statement.
“The more we understand Canadians' perceptions of regulation in the investment industry, the better we can address concerns, helping investors gain better access to the advice they need to achieve their financial goals.”
The survey also pointed to a relative distrust of online advice platforms, as only 31% of current investors and 44% of aspiring investors expressed a belief that there are fewer regulatory protections in place for online advice compared to advice from a human.
The suspicious attitude toward online advice platforms was most prevalent among senior investors aged 65 and above, with 43% saying they believe advice from such platforms come with less regulatory protection. Investors from that group were also least likely to access an automated online investment tool or service for information or advice (8%).
In the statement, IIROC noted that its rules impose the same level of regulation on online investment advice models and full-service, in-person advice models. Online advisors, it said, are subject to the same KYC and suitability obligations as traditional face-to-face advisors.
On order-execution-only (OEO) platforms, also known as discount or direct brokerages, the responsibility of making buy and sell decisions rest entirely in the hands of investors, with no advisor or firm to advise them. Since the business model requires no KYC nor suitability obligations, IIROC said, OEO platforms work under a different regulatory regime.
“IIROC wants to make its regulation more agile and more proportionate to meet Canadians' changing financial needs and expectations – all the while ensuring that investors remain protected, no matter how they choose to seek advice and consume financial services,” IIROC President and CEO Andrew Kriegler said.
