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Regulatory burdens on advisors create time constraints, leading many advisors to increase minimum account amounts. kate_sept2004/iStockPhoto / Getty Images
More young investors are choosing to manage their own investments as financial advisor account minimums increase and DIY options become more accessible, new research shows. It became clear.
More young investors are using online platforms to manage their investments rather than consulting with a financial advisor, according to Vanguard Investments Canada Inc.’s Value of Advice study released Tuesday. It became clear. Among Canadians aged 18-34, 40% say they use an online brokerage, while 38% say they use a financial advisor.
In comparison, 70 percent of people over 55 rely on an advisor, and only 17 percent use online platforms. Almost half (49%) of 35-49 year olds used an advisor and a third (32%) managed their investments online.
“This is a story of two investor groups: the older generation and the younger generation,” says Mario Cianfarani, head of distribution at Vanguard Canada.
Cianfarani said regulatory burdens on advisors create time constraints and many advisors are increasing their minimum account amounts. “It shows in the data that younger generations feel the need to move towards DIY.”
Across all age groups, more than half (56%) of Canadians say they use an advisor, compared to a quarter (26%) who use an online brokerage. Men (35%) were more likely than women (18%) to manage their investments online.
Younger customers also say they have less trust in their advisors, with 35 percent saying they don’t fully trust their advisors, compared to 20 percent of all age groups.
The results of a Vanguard survey of 1,307 Canadians with investable assets conducted in March using the Angus Reid Forum are based on the Canadian Securities Administration (CSA) survey conducted at the same time and published in July. ) findings were similar to those of a larger study.
CSA revealed that 61% of investors are working with an advisor, down from 69% in 2020. Almost half (45%) of investors invest independently, and about a third opened their account in the past two years.
According to CSA, the biggest decline in advisor use was among investors under 45 and those with less than $100,000 invested. Among investors with portfolios over $100,000, advisor use did not decline from the previous year.
In July, Marissa Sorrows, chair of CSA’s Investor Education Committee and director of communications and communications for the New Brunswick Financial and Consumer Services Commission, told Globe Advisor that in a pinch, advisors “It’s not a completely hopeless scenario.” About how young people are investing.
“If you look at the data, there was no lack of desire to work with a financial advisor,” she said. “Whether it was the size of your portfolio, or whether you felt your needs were not complex enough to use an advisor, you may want to work with an advisor in the future. I’m just waiting until I have a lot of assets.”
Cianfarani said investors without advisors also expressed interest in professional advice. It’s up to advisors to develop solutions to serve clients with fewer investable assets, he added.
loyalty and values
A Vanguard study found that 71 per cent of Canadians with an advisor are likely to stay. Loyalty was strongest among older adults, but also among those receiving financial planning services. 85 percent of people with a formal financial plan said they were very likely to continue with an advisor.
Financial planning also contributed to customer optimism. The study found that 40 percent of customers who had an advisor create a financial plan reported high levels of optimism about their financial future, compared to those without a formal plan. It was only 22 percent.
Regular communication (at least monthly) also contributes to improving clients’ future prospects, the study found.
Cianfarani says behavioral coaching is where advisors can provide tremendous value.
“Behavioral coaching comes in times like the pandemic (or) meme stock boom,” he says. “The company is sticking to its plan and not reacting to the headlines and getting into day trading. That creates tremendous value for investors.”
