Investors not always getting the best from advisors, says OSC IAP

Many small and mass-market investors are missing out on basic financial planning concepts according to a new report.

The Ontario Securities Commission’s Investor Advisory Panel says that its survey of 3,000 Canadians found that while most feel they get some information about important investment topics from their advisors, some important issues are overlooked.

Almost a third of respondents were not able to say that they their advisor had ever discussed planning for retirement, education, or buying a home.

More than half said that communication with their advisor was infrequent and brief, or non-existent, over the past year.

The OSC report concludes that the results raise questions over the advice given to small and mass-market investors and whether it is comprehensive and timely enough to effectively meet their needs.

The IAP wanted to assess the impact that potentially banning trailing commissions would have.

"We wanted to see just how much advice small and mass-market investors actually get," said IAP chair Neil Gross, "so we could better understand what's actually at risk if – as is sometimes asserted – a ban might result in those investors losing access to the advice they currently receive."

Other key findings:

• 43% of advised investors did not agree that their advisor had provided them with educational advice about financial concepts.
• 31% were unable to say their advisor had ever spoken to them about planning for financial goals such as retirement, education or buying a home.
• Only a small minority reported they'd received advice about budgeting, debt management, tax and estate planning, or planning for the future needs of a family member.
• 60% of mass-market investors and 75% of investors with small portfolios reported that their advisor communicated with them in the past year only "once or twice" or did not communicate at all.
• Nearly half (49%) of mass-market investors said their advisor spent less than an hour, in total, communicating with them during the past year or didn't communicate at all. Two-thirds (68%) of small investors and 44% of mass-affluent investors said the same thing.

The full study – A Measure of Advice: How much of it do investors with small and medium-sized portfolios receive? – is available on the OSC website.