Almost two-thirds (65%) of Canadians are unsure of whom to trust when choosing a financial advisor, which is problematic as 73% of Canadians say trustworthiness is a very important consideration when looking for an advisor, according to a survey released by the Toronto-based Financial Planning Standards Council (FPSC) on Friday.
Other obstacles to connecting with a financial professional include not knowing where to start looking for an advisor and doubting that the fees for an advisory relationship are worth the expense, with 56% of survey participants stating that both are an issue. Half of survey participants are also unsure whether they would prefer a fee-based arrangement or a commissions-based arrangement for financial planning services.
However, the research suggests that financial professionals can overcome those barriers by leveraging the key benefits that Canadians say these professionals provide. For example, 65% of Canadians state that an important reason to work with financial planners is because these professionals help consumers save money. Approximately two-thirds of survey participants (62%) also said financial planners are key to developing customized long-term financial plans and are helpful in explaining financial matters.
Canadians’ level of confidence in reaching their financial goals can depend on whether they work with a certified financial planner (CFP) or another financial professional, according to the results of the study, released just in advance of Financial Planning Week, which begins Monday. Although 29% of Canadians working with a financial professional strongly agree they will meet their financial life goals, that number drops down to 13% for survey participants not working with a professional.
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Advisors may also benefit by knowing what services are important to Canadians. Almost half (48%) of survey participants stated that retirement planning is the most helpful financial planning service. Budgeting and debt management tied with investment planning for the second most popular service Canadians desire, at 41%.
And with only 18% of Canadians stating they are knowledgeable about financial matters, financial advisors may be able to differentiate their services by helping clients become more financially literate.
The research also asked Canadians whether they have a comprehensive written financial plan and found that most Canadians (69%) do not. Men (36%) are more likely than women (28%) to have a documented financial plan.
More than one-third (37%) of individuals between the ages of 18 and 34 have a written financial plan, which is more than those over the age of 50 with a documented plan (27%).
The survey also asked participants to list their financial priorities. Almost two-thirds (63%) said being free of major debt or consumer debt is very important to them. The second-most popular priority was being prepared for a financial emergency with 57% of survey participants stating this to be the case. Home ownership (54%) and being able to afford a desired lifestyle in retirement (53%) were also very important priorities to Canadians.
This research is derived from a global survey commissioned for the FPSC’s international body, the Financial Planning Standards Board based in Denver. The Canadian data was collected between June and July and used the responses of 1,000 Canadians.