Survey Uncovers Unspoken Unease Between Advisors and Clients

Stats Suggest Canadian Investors Need New Performance Markers from Advisors

TORONTO, April 24, 2018 /CNW/ - A illuminating new survey shows an unspoken, underlying unease between Canadian investors and their professional financial advisors. With a firm belief that advisors and investors must equally collaborate to ensure the best financial results, Systelos, a more visible and collectively intelligent way to work with advisors, commissioned an Environics Study to investigate what Canadians really think about their advisors and how their relationship can be improved.

Key Findings of the Survey:

1. The Direct Disconnect: Canadians investors are loyal to advisors, but aren't too quick to recommend them

A surprisingly small percentage of Canadians (6%) said they were not loyal to their advisor, and only 12% say they have fired an advisor.

In spite of this apparent customer loyalty, only 47% (less than half) of investors say they have recommended their advisor to a family member.

"Saying you are loyal to your advisor and being confident enough to recommend them are clearly two different things," said Jad Chehlawi, founder of Systelos. "This uncovers that deep down inside, investors feel like something is off but don't know what they need to fill the void."

2. Many Advisors are still selling like it's 1999

Contributing to the sense of unease with advisors may be the analogue way that they still sell financial products and services in a digital world. When asked "how did your financial advisor earn your business," surprisingly most investors said they were either swayed by sample financial plans (35%), proposals (35%), or a portfolio of past performance (32%).

Only 15% of Canadians asked for a reference from other clients.

18% of investors wisely said that their advisor "allowed them to experience how they worked before they hired them."

"In the current institutional approach of onboarding clients, there's a lot of paper, figures, and graphs, but investors don't really get a sense of how an engagement will be with their advisor until after they move forward," added Chehlawi.

3. The economics of trust don't add up

A majority of Canadians say they are "satisfied with their returns" (59%), but Chehlawi questions how they are measuring performance. According to Chehlawi's evaluation of supporting S&P Indices Data, less than 20% of Canadian money managers outperformed the market over the past 10 years, but 76% of Canadian investors polled think that money managers beat the market more often than they do.

"This is where we see a bizarre, Wizard of Oz effect from both investors and advisors," added Chehlawi. "Investors want to believe that their advisors are bringing them value by beating the market. This creates a constant pressure to keep up with clients' expectations that can't be met...at least until they find other markers of performance."

4. Caution: adjust blind spots before giving advice

According to the survey, the majority of financial advisors (74%) are not engaging their clients in all aspects of their financial lives, which creates serious blind spots.

Blind spot breakouts:

• Only 19% of investors said they get tax planning help from their financial advisors
• Only 16% of investors said they get insurance advice from their financial advisors
• Only 10% of investors said their advisors assist them with wills and other legal documents

"Unfortunately, the majority of Investment Advisors are making decisions based on only a small part of their client's information," added Chehlawi. "How can they effectively protect their clients and make long term decisions with such large blind spots?"

5. Collaboration frustration

According to the survey, 65% of Canadian Investors want to share decision making with their advisor, but the majority (77%) of investors can't track their advisors work in real time, creating real barriers to collaboration.

"Technology has advanced to the point where we can track a $10 car ride, so why can't investors engage with the experts managing their lifelong assets and collaborate with them instantly?" added Chehlawi. "Everyone wins through increased visibility and engagement."

The bottom line: Advisors need a new job description

According to Chehlawi, the findings of the survey confirm that Advisors need to revisit how and where they create value. If the majority of money managers fail to outperform the market, it makes no sense that the only marker for performance is the market. Chehlawi suggests that a new breed of financial advisors should be evaluated on the following markers:

1. A deeper discovery process to help navigate the complexity of financial trade offs in client's life events
2. Real time access to your advisor and to curated financial strategies through modern digital tools
3. A seamless connectivity to other financial experts to orchestrate all the moving parts of the client's financial life

"Financial trade offs go well beyond just investments," added Chehlawi. "There are competing objectives such as investor personality versus selected portfolio, saving versus spending, investment versus insurance products, and paying taxes now versus later. Human advisors will always have a major advantage because people need people to educate them in order to make the right decision then follow up with the right action."

About Systelos (mysystelos.com):

Systelos is a discovery and collaboration platform that brings clients' financial lives in one place with the right experts at their fingertips. Systelos increases confidence in financial decisions by visibly demonstrating the value of advice and by enabling collective intelligence between investors, advisors, and other experts.

About the Environics survey

This report presents the findings of an online survey conducted among 310 adults from February 26 – March 1 2018. In order to qualify for this survey, respondents had to be 18 years of age or older, reside in Canada, and work with a financial advisor.

*Source: S&P Dow Jones Indices LLC, Fundata. Data as of June 30, 2017. CIFSC categorizations are used. Financial information provided by Fundata Canada Inc. Table is provided for illustrative purposes. Past performance is no guarantee of future results.

SOURCE Systelos

Patrick McCaully, Pointman News Creation, [email protected], 416-855-9427 x-301, pointmannc.com