Looking at a breakdown of the total wealth of Canadians, Investor Economics Inc. data tell us that at the end of 2006, slightly more than 30% of it was in financial wealth. If we drill down into what makes up financial wealth, we learn that investment funds and fund wraps make up 32% of that — up from 23% 10 years ago. Deposit assets comprise the next largest share at 30.8%, followed by direct equity, fixed-income and money market ownership at slightly more than 24%.
What these numbers tell us is that Canadians have become far more knowledgeable investors and are increasingly turning to mutual funds as the preferred investment product to build their financial wealth. This is substantiated by the Investment Funds Institute of Canada’s Annual Investor Survey, which told us last year that mutual fund investors had the most confidence in the ability of their mutual funds, along with their primary residence, to meet their household’s financial goals. This is a huge vote of confidence in the product, and something we can be very proud of — but that level of confidence brings with it a high level of responsibility on the part of the industry.
The message here is that the industry is the steward of the hopes and dreams of many Canadians, and we must work to retain that confidence, not only by continuing to provide the products they need and delivering the advisory services to help them choose the right solutions for them, but also by creating better informed consumers so that they can make informed decisions.
The major way to go about this is to build upon the very important improvements we have already carried out in IFIC’s collaborative business relationship with regulators. We want to continue to make progress in becoming involved earlier in the rule-making process, well before regulators reach the point at which they are sending us rules and asking for comment. We have already seen how well this approach can work on mutual fund governance and the registration reform project.
Another example of the leadership role IFIC has taken in encouraging debate and discussion is the concept paper from the Joint Forum of Financial Market Regulators on point-of-sale disclosure. In our comment letter on POS disclosure, we gave constructive suggestions about how we could provide consumers with information at the point at which they are making critical decisions.
We have also encouraged regulators to work with us to develop solutions that will ensure investors have continued access to a broad range of products and services, and reasonably consistent information across competing products, so they can make fully informed decisions about financial products.
No one is more interested in the well-being of the Canadian investor than the mutual fund industry, but regulators need to remember — and we need to remind them — that the investor doesn’t just turn to the financial advisor to talk about mutual funds. Investors confer with their advisors in searching for solutions over the full scope of life issues, from the responsibility of educating children to achieving peace of mind in retirement.
As a result, the advisory channel is important in the context of the broader Canadian economy because advisors provide an extensive range of help and guidance. We will continue to make the case for a consistent consumer experience across Canada as we respond to the various regulatory programs. IE
Joanne De Laurentiis is president and CEO of the Investment Funds Institute of Canada.