Clients want choice and flexibility in how they pay for advice, whether it’s an embedded fee or fee-based model, says Peter Intraligi, president and COO, Invesco Canada Ltd.
Speaking Monday at the Advocis Regulatory Affairs Symposium in Toronto, Intraligi said Invesco is currently conducting a survey of investors and their understanding of advisor fees. As of Monday, approximately 430 people have responded and Intraligi expects that number to increase to over 1,000 by the time full results are released in mid-November.
Early results of that survey, in which clients were shown an educational video on fees and then asked a series of questions, reveal that 80% of respondents said they want to make the choice as to whether they go with an embedded fee structure or fee-based model.
“They don’t want a regulator, they don’t want consumer advocates, they certainly don’t want the mutual fund companies or advisors telling them how to pay for advice,” said Intraligi. “They want to be empowered to make a decision on their own.”
Clients do agree with regulators in terms of how they want to see those fees. Eighty-eight per cent of survey respondents said they want to know the cost of their fees in dollar terms.
“This is a real tip-of-the-cap to regulators here,” said Intraligi. “I think all of us would agree, when you’re paying for a service it’s natural to want to know how much it’s going to cost you in dollar terms.”
Survey results also indicate that while clients want choice they may not necessarily want change. Eighty per cent of respondents said they prefer to be charged for advice through a mutual fund fee as opposed to having to negotiate prices and pay for advice separately.
More advisors need to talk with clients about fees, said Intraligi, in order for investors to make informed decisions. Invesco survey results indicate 15% of respondents said they have never discussed compensation with their advisor while 51% said they were unaware of the different fee options available.
“Whether you’re in the investment management business or you’re a dealer or Advocis or IFIC or any of the other industry body,” said Intraligi, “your responsibility is to educate, not to limit choice.”