OSC’s Investor Advisory Panel Releases Survey Findings on How Much Advice Investors Receive

TORONTO – The Ontario Securities Commission’s Investor Advisory Panel (IAP) today released A Measure of Advice: How much of it do investors with small and medium-sized portfolios receive?  This survey of 3,000 Canadians aims to shed light on the nature, scope and extent of investment advice that small and mass-market investors currently receive from their investment advisors.

While most of those investors who consult an advisor do get some information about important investment topics, the survey results indicate that, in many cases, basic financial planning concepts are not addressed in the advice provided. For example, nearly a third of those surveyed were unable to say their advisor ever talked to them about concepts such as planning for retirement, for education, or for buying a home. More than half reported only infrequent and brief communication or no communication at all from their advisor over the past year.

The survey results raise significant questions about whether most small and mass-market investors actually have access to advice that is comprehensive and timely enough to effectively meet their needs, even though they pay for it – often through embedded compensation schemes, such as trailing commissions, that have been shown to create harmful conflicts of interest.

The IAP hopes this survey data will help policymakers assess the potential impact of banning the use of trailing commissions. “We wanted to see just how much advice small and mass-market investors actually get,” said IAP chair Neil Gross, “so we could better understand what’s actually at risk if – as is sometimes asserted – a ban might result in those investors losing access to the advice they currently receive.”

Key findings:  

• 43% of advised investors did not agree that their advisor had provided them with educational advice about financial concepts.
• 31% were unable to say their advisor had ever spoken to them about planning for financial goals such as retirement, education or buying a home.
• Only a small minority reported they’d received advice about budgeting, debt management, tax and estate planning, or planning for the future needs of a family member.
• 60% of mass-market investors and 75% of investors with small portfolios reported that their advisor communicated with them in the past year only “once or twice” or did not communicate at all.
• Nearly half (49%) of mass-market investors said their advisor spent less than an hour, in total, communicating with them during the past year or didn’t communicate at all. Two-thirds (68%) of small investors and 44% of mass-affluent investors said the same thing.

About the Investor Advisory Panel

The IAP advises and comments on proposed rules, policies and investor protection initiatives, while considering the views of a broad range of investors through consultation with investors and organizations representing investors.

The IAP is comprised of nine members appointed by the Chair of the Ontario Securities Commission following a public application process and on the advice of a selection committee consisting of two Commissioners and a Vice-Chair. Members of the IAP are appointed for terms of up to two years, with possible reappointment for one additional term.

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