wealth advisory services canada, december 2017...overview canadians, particularly older consumers,...

WEALTH ADVISORY SERVICESCANADA, DECEMBER 2017

WEALTH ADVISORY SERVICES, CANADA - DECEMBER 2017 2

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OVERVIEW

Canadians, particularly older consumers, are experiencing a huge financial windfall in terms of inheritances and financial assets. There is a pressing need for quality financial advice and wealth management services. Over the past few decades, financial products and markets have grown in sophistication. At the same time, individuals looking at retirement are becoming more reliant on their own investments to supplement government and corporate pension plan benefits. In addition, the need for effective planning in specialized areas (such as ownership of foreign property, insurance solutions, alternative investments, leveraged investing, small business ownership, charitable giving and trusts) is increasing. As a result, many investors now look for guidance from experienced and competent advisors.

Definition

This report covers consumer attitudes and behaviour related to wealth advisory services. It explores product ownership, type of investment firm used for wealth management, attitudes towards investing and financial advice, use of financial advisors and reasons for changing financial advisors. The results are also analyzed by level of financial assets.

Regional classifications

• Prairie Provinces: Alberta, Saskatchewan and Manitoba.• Atlantic Provinces: New Brunswick, Newfoundland/Labrador,

Nova Scotia and Prince Edward Island.

Income

• Throughout the Report, income data refers to annual household income.

Glossary

• Exchange-traded fund (ETF) is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.

• Guaranteed Investment Certificate (GIC) is a Canadian investment that offers a guaranteed rate of return over a fixed

period of time, most commonly issued by trust companies or banks. GICs with a term of five years or less are insured up to $100,000 by either the Canada Deposit Insurance Corporation (CDIC) or Credit Union Deposit Insurance Corporation (CUDIC).

• Individual Pension Plan (IPP) is a one-person defined benefit pension plan which allows the plan member to accrue retirement income on a tax-deferred basis.

• Individual Pension Plan (IPP) is or IPP is a Canadian retirement savings vehicle. An IPP is a one-person maximum defined benefit pension plan which allows the plan member to accrue retirement income on a tax-deferred basis.

• Life Income Fund (LIF) is a type of registered retirement income fund that is used to hold pension funds, and eventually pay out retirement income.

• Real Estate Investment Trust (REIT) is a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock.

• Registered Retirement Income Fund (RRIF) is an extension of an RRSP and is used to systematically draw retirement income during retirement.

• Registered Retirement Savings Plan (RRSP) is a type of Canadian account for holding savings and investment assets. RRSPs have various tax advantages compared to investing outside of tax-preferred accounts. They were introduced in 1957 to promote savings for retirement by employees and self-employed people.

• Robo-advisors are portfolio management firms that use client information and algorithms to develop automated portfolio allocation and investment recommendations tailored to the individual clients.

• Stock Savings Plan (SSP) is a plan wherein certain provinces (such as Alberta, Ontario and Quebec) provide tax credits for provincial income taxes to residents who purchase certain investments, in particular the initial public offerings (IPOs) of local companies.

• Tax Free Savings Account (TFSA) is a savings vehicle whereby income earned within a TFSA will not be taxed in any way throughout an individual’s lifetime. In addition, there are no restrictions on the timing or amount of withdrawals from a TFSA, and the money withdrawn can be used for any purpose. They were introduced by the Government in 2009 to provide another tax-advantaged savings vehicle in addition to the RRSP.



REPORT CONTENT

OVERVIEWDefinitionRegional classificationsIncomeGlossary

EXECUTIVE SUMMARYThe issues

Around half of Canadians have a TFSA and/or an RRSPFigure 1: Product ownership, October 2017Around half of investors use a retail bank as their main investment companyFigure 2: Type of financial institution used for investments, October 2017Most investors not enamoured with passive investingFigure 3: Attitudes towards investing (% agree), October 2017Performance, fees and product offerings are the top reasons for attritionFigure 4: Reasons for attrition, October 2017Willingness to use robo-advisors strongly varies by age and genderFigure 5: Agreement with statement on use of robo-advisors, by age and gender, October 2017

The opportunitiesRobo advisors: immense potential but could be challenges for full-service providersAround seven in ten Asian Canadians use banks/bank wealth management subsidiariesFigure 6: Type of financial institution used for investments (select), Asian Canadians vs overall, October 2017One in five millionaires use a bank-owned discount brokerageFigure 7: Type of FI used (select), by amount of Investments, October 2017

What it means

MARKET FACTORSWHAT YOU NEED TO KNOW

Diminished capacity among senior is a consequence of an aging populationCanada will become increasingly diverseUsage of digital investment tools including robo-advisors is lowHousehold debt, home prices biggest risk to Canadian economy

MARKET FACTORSDiminished capacity among seniors a consequence of aging population

Figure 8: Canadian population, by age, 2016Canada will become increasingly diverseUsage of digital investment tools including robo-advisors is low

Figure 9: Awareness and usage of digital financial products and services, March 2017Digital financial advice with a female focus: WorthFM, Ellevest and JoyHousehold debt, home prices biggest risk to Canadian economy, according to the Bank of CanadaCanada’s growth expected to top the G7 this year as OECD boosts forecast

KEY PLAYERSWHAT YOU NEED TO KNOW

Canada's first artificial intelligence (AI) ETF (Exchange-Traded Fund) hits the market



Canada’s first Bitcoin fund launchedWealthsimple launches robo-advisor service in the UKNational Bank makes a $6 million investment in Nest WealthRBC and others join the robo-advisory bandwagon

INDUSTRY DEVELOPMENTS & INNOVATIONSCanada's first artificial intelligence (AI) ETF (Exchange-Traded Fund) hits the marketCanada’s first Bitcoin fund launchedRobo-advisors

Wealthsimple launches robo-advisor service in UK, its second international marketRobo-advisor Nest Wealth branches out in search of scaleNational Bank makes a $6 million investment in Nest WealthRBC and others join the robo-advisory bandwagon

MARKETING CAMPAIGNSCIBC paints a picture

Figure 10: Artist Jen Mann captures the essence of CIBC Private Wealth Management client Monika Deol, May 2017Wealthsimple gift cards

Manulife’s creepy carnivalFigure 11: Carnival, September 2017

Selected campaigns from Mintel ComperemediaBMO SmartFolio Automated Investing SolutionsFigure 12: BMO online advertisement for SmartFolio, November 2017Sun Life pitches the value of adviceFigure 13: Sun Life Financial advice online advertisement, November 2017

THE CONSUMERWHAT YOU NEED TO KNOW

Around half of Canadians have a TFSA and/or an RRSPAround half of investors use a retail bank as their main investment companyOne in five millionaires use a bank-owned discount brokerageMore than half do not want advisors to work on commissionsWillingness to use robo-advisors strongly varies by age and genderMost investors not enamoured with passive investingFew consumers have changed their primary investment company in the last five years

OWNERSHIP OF INVESTMENTSOne in 20 Canadians has more than a million in investments

Figure 14: Breakdown of investments, October 2017Atlantic Canadians have a lower ownershipMen more likely to own some productsFigure 15: Product ownership (select), men vs women, October 2017

Around half of Canadians have a TFSA and/or an RRSPFigure 16: Product ownership, October 2017Figure 17: Ownership of investment products (selected), by asset level, October 2016Around one in four Chinese Canadians have stocks and/or mutual fundsFigure 18: Product ownership, Chinese Canadians vs overall population, October 2017

WEALTH MANAGEMENTAround half of investors use a retail bank as their main investment company

Figure 19: Type of financial institution used for investments, October 2017One in five millionaires use a bank-owned discount brokerageFigure 20: Type of FI used (select), by amount of investments, October 2017Men are more likely to use bank-owned discount brokerages, women insurance companiesFigure 21: Type of financial institution used for investments (select), by gender, October 2017



Around seven in ten Asian Canadians use banks/bank wealth management subsidiariesFigure 22: Type of financial institution used for investments (select), Asian Canadians vs overall, October 2017

FINANCIAL ADVICEAlmost half of investors use financial advisors

Figure 23: Use of financial advisor, October 2017Reliance on a financial advisor is higher among the affluent

Figure 24: Use of financial advisor, by affluence, October 2017Around three in four advised clients trust advisors to act in their best interests

Figure 25: Attitudes regarding financial advice, October 2017More than half do not want advisors to work on commissions

Figure 26: Attitudes regarding financial advice, October 2017Two in three believe referrals most effective way to choose an advisor

Figure 27: Attitudes regarding financial advice, October 2017Younger clients more likely to agree that advisors are useful for those with a large amount of assets

Figure 28: Attitudes regarding financial advice, October 2017

ROBO-ADVISORSOne in four advised clients are willing to use robo-advisors

Willingness to use strongly varies by age and genderFigure 29: Agreement with statement on use of robo-advisors, by age and gender, October 2017Robo-advisors: immense potential but could be challenges for full-service providers

INVESTING PREFERENCESMost investors not enamoured with passive investing

Figure 30: Attitudes towards investing (% agree), October 2017Discount brokerage customers more likely to prefer passive investmentsFigure 31: Attitudes towards investing (% agree), discount brokerage clients vs overall, October 2017

Majority prefer low risk investments but 35-54s are less likelyFigure 32: Attitudes about risk tolerance and financial advice, October 2017

Around one in four trust independent advisors moreFigure 33: Attitudes towards investing (% agree), independent investment company clients vs overall, October 2017

Around one in five 18-34s feel investment marketing is male-directedFigure 34: Attitudes towards investing (% agree), October 2017

ATTRITIONOnly around one in eight consumers have changed their primary investment company in the last five years

Figure 35: Changing investment provider (Attrition %), October 2017Young males more likely to change their investment companyFigure 36: Change of primary investment company, by age and gender, October 2017Discount brokerage customers more likely to have shiftedFigure 37: Change of primary investment company, by type of FI, October 2017

Performance, fees and product offerings are the top reasons for attritionFigure 38: Reasons for attrition, October 2017

Awareness of investment fees is high among advised clientsFigure 39: Attitudes towards financial advice (% agree), by assets, October 2017Awareness of fees is lower among general investors

APPENDIXDATA SOURCES AND ABBREVIATIONS

Data sourcesConsumer survey data

Abbreviations and terms



DATABOOK CONTENTStandard demographics you can expect to see tracked in our Databooks:

• Gender • Age • Gender/age combined • Generation • Race/Hispanic origin • Geographic region • Geographic area (urban, suburban, rural) • Household income • Age/income combined • Employment status • Education level • Presence and number of children in the household • Household size • Marital status • Home ownership status • Social media usage • Mobile device ownership

Consumer Research

Consumer section: Amount of investments

Amount of investmentsAmount of investments, by demographics

Consumer section: Product ownership

Product ownershipProduct ownership, by demographicsProduct ownership, by type of FIAttitudes towards investing, by type of FIAttitudes towards financial advice, by type of FIAttrition, by type of FI

Consumer section: Type of financial institution

Type of financial institutionType of financial institution, by demographicsProduct ownership, by type of FIType of FI, by value of assetsAttitudes related to investing, by value of assetsUse of financial advisor, by value of assetsAttitudes towards financial advice, by value of assetsAttrition, by value of assets



Consumer section: Attitudes related to investing

Attitudes related to investingAttitudes related to investing, by demographics

Consumer section: Use of financial advisor

Use of financial advisorUse of financial advisor, by demographics

Consumer section: Attitudes towards financial advice

Attitudes towards financial adviceAttitudes towards financial advice, by demographics

Consumer section: Attrition

AttritionAttrition, by demographics

Consumer section: Reasons for attrition

Reasons for attritionReasons for attrition, by demographics

Demographics by demographics

Demographics by demographics

© 2017 Mintel Group Ltd. All rights reserved.Confidential to Mintel.

Published by Mintel Group Ltdwww.mintel.comemail: [email protected]

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wealth advisory services canada, december 2017...overview canadians, particularly older consumers,...

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