Mutual funds lead the way when it comes to investor confidence, according to research conducted by Pollara on behalf of the Investment Funds Institute of Canada (IFIC).
The survey also confirmed that investors are looking for choice when it comes to paying for advice.
The Pollara survey asked mutual fund owners to rank their confidence in the ability of various financial products to help them achieve their financial goals.
“Again this year, Canadian mutual fund investors have expressed higher confidence in the ability of mutual funds to achieve their financial goals than in other products tested,” says IFIC president and chief executive Joanne De Laurentiis. “Confidence in mutual funds has continued to improve steadily since 2009, and is now again in line with the confidence levels of 2006.”
In the 2014 survey, mutual funds achieved an 85 per cent confidence level compared with 65 per cent for stocks, 64 per cent for GICs, 55 per cent for bonds, and 34 per cent for ETFs.
Confidence in advisors also remains high with 98 per cent of those surveyed agreeing that they trust their advisors to give them sound advice and 92 per cent that they obtain better returns than they would if investing on their own.
For the second year, respondents were asked their views on different options when it comes to paying for advice. The survey found 54 per cent support the prevalent Canadian model of paying through embedded fees, while 38 per cent would prefer a direct payment to the advisor. This represents a slight shift since last year towards a preference for embedded fees. However, when asked about the likelihood of staying with their advisor if direct payment resulted in a higher cost to the investor, only 18 per cent indicated they would be very likely or certain to continue.
“Studies by CIRANO and the Conference Board of Canada have demonstrated the positive impact of financial advice on investor savings, and on Canada’s long-term economic wellbeing. Any policy discussion that has the potential to limit payment options needs to take these findings about investor preferences into account,” says De Laurentiis.
New this year were questions on how investors rate their advisor’s understanding of their risk tolerance. Nearly all (95 per cent) mutual fund investors say that they discussed their comfort level with investment risk with their advisor and agreed that they were satisfied with their advisor’s original and ongoing understanding of their risk tolerance.
“Investor satisfaction with advisors’ understanding of their appetite for risk is also reflected in investors’ consistently high levels of satisfaction with the advice they receive,” says De Laurentiis. “This number has steadily increased since 2009 and may be the result of the ever increasing focus on disclosure.”