Thursday 13 January 2011

THE Priority for Improving Canadians' Personal Financial Success: Advisor Professionalism

Like it or not, bloggers like me, and even mainstream financial media like the Globe and Mail and the Financial Post, have little influence on the financial success of most Canadian adults over 35. Last February the Investor Education Fund's website published the results of a survey with the tell-all title Advisors Top Source of Information for Older Canadians. People in that age group overwhelmingly rely on financial advisors (see Exhibit 1 in the study report for the over 34s) - and primarily those within banks or other financial institutions - as the experts to guide their financial decisions.

The report foresees more and more new advisor relationships being started up over the coming years so it is time to get going now. A higher degree of professionalism, such as doctors, engineers and accountants have, is what is needed.

Two things are required of those advisors and their recommendations to clients that really are not sufficiently the case today. They must be:
  • broadly well-informed to give holistic or integrated recommendations - knowledge of investments, taxes, plan types (RRSPs, RESPs, TFSAs etc), mortgages, insurance;
  • bound by fiduciary duty with strong sanctions and enforcement of ethics so that client interests come first.
The national priority is not financial literacy or a national securities regulator but better advisors. Few people have the time or the inclination to develop the skills to be DIY financially. Though we all can and should always bear the ultimate responsibility for our finances, just as we do for own health, it does not mean we should not expect to find ready availability of expert financial "doctors" to give us trustworthy impartial advice.

Btw, bloggers need not despair. The under 35s use the Internet extensively to find financial information. 48% read online forums and blogs according to chart C-1 in the key findings for the 20-34 age group.


Jamie said...

Keep the whole beginning part of learning with books from the library or find cheap ones to purchase. Then when your overloaded with that stuff, go to free or cheap trading blogs from longterm reputable traders and get more cognitive overload from them while also using to have some basic use on software. Then maybe buy good and useful material to continue the education process. All the while hoping that you don’t blow up your account in the process.

larry macdonald said...

I think you raise good points here. Good post. said...

Thanks for the reference on your website CanadianInvestor! Just to post an update, the Canadian Securities Administrators have recently put out a proposal calling for the performance of investments and fees related to investments to be posted on financial statements. Have a look! -

CanadianInvestor said...

Thanks GetSmarter, that's a useful link in your comment, especially where it gives the contact info for regulators. I think I will send my comments to the regulators. They probably won't listen now but if we do like our kids and keep pestering, pestering, pestering they may finally cave in! I'm gonna shortly have more comment on performance monitoring in a new post.

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