Canadians choose advice for long-term investing success: IFIC

The survey results address the often asked question as to whether the accumulation of wealth precedes the seeking out of advice. Put simply, the answer is ‘no’ — most first time mutual fund investors have only modest levels of assets to invest and little investing experience. The majority of respondents, 57%, had less than $25,000 to invest when they first sought out advice and fully one-third had less than $10,000.

In addition, once they start working with an advisor, mutual fund investors value advice — on average working with advisors for 18 years, and two-thirds consult their advisor for other financial advice, such as budgeting and planning for the future.

“Canadian mutual fund investors appreciate the role that advisors play in supporting their long-term financial health,” says IFIC President & CEO Joanne De Laurentiis. “This relationship between investors and advisors enhances investors’ confidence in mutual funds as a means of meeting their financial goals.”

Among the survey’s other findings:

• Investors feel they are knowledgeable (81%) about investing in mutual funds.
• Advisors continue to be the dominant source of mutual funds for Canadian investors, and investors remain satisfied (82%) with their advisor’s advice.
• Beyond purchasing mutual funds, two‐thirds say they receive other services from their advisor such as investment advice, budgeting, or planning for future expenses.
• The most influential reasons for first contacting an advisor are the need to invest for retirement and a desire for a greater return on their money than can be achieved on their own.
• Almost all investors (94%) are comfortable that they had the right information to make an informed decision the last time they purchased a mutual fund.
• Seven‐in‐10 are at least somewhat confident in their knowledge of any fees they pay.
• The percentage of clients who recall their advisors discussing compensation (up seven points to 54%), fees (up six points to 64%) and the management expense ratio (up four points to 54%) has been increasing since 2009.
• Most (59%) continue to prefer to pay fees that are part of their mutual funds – one‐third would prefer to pay for advice separately.

The full survey report, Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry 2011, is available on the IFIC website at www.ific.ca.

The research was conducted by Pollara Inc., a Canadian public opinion and marketing research firm, in June of this year. 1,006 telephone interviews were conducted with mutual fund holders eighteen years of age or older who make all or some of the decisions regarding mutual fund purchases in their household.