SOURCE: Justwealth

Justwealth

July 12, 2016 08:40 ET

Canadians Lack Awareness of Investment Fees Ahead of CRM2: Justwealth Financial Survey

Online Investment Providers Are Well Positioned to Serve Investors Concerned About High Fees

TORONTO, ON--(Marketwired - July 12, 2016) - A recent Canadian survey by Justwealth Financial Inc. (Justwealth) reveals a lack of awareness around upcoming changes to investment reporting requirements, as well as a gap in knowledge of how much investors are being charged.

The changes, known as Client Relationship Model -- Phase 2 or CRM2, will take effect on July 15, 2016 and represent the third annual list of amendments to promote increased disclosure regarding fees and investment performance. According to the Justwealth survey, 65.1 per cent of Canadians are not aware of the upcoming changes.

"For a long time, Canadian investors have been kept in the dark about how fees are charged for investment services and the many associated conflicts of interest that can exist," said Andrew Kirkland, President, Justwealth. "This veil of secrecy has contributed to an erosion of trust in traditional investment models. CRM2 will go a long way in repairing this trust, and we applaud the upcoming changes."

Almost two-thirds of survey respondents did not know exactly how much they paid in annual investment fees. This is in contrast to concerns expressed over the cost-effectiveness of financial services such as investment management. When asked about the key motivating factors for considering using an online investment service, the number one factor by a wide margin was cost, at 51.3 per cent.

"As investors come to understand exactly what they're paying in fees, investment firms will be under the microscope to explain the value they provide their clients," said James Gauthier, Chief Investment Officer, Justwealth. "There's been some scrambling and damage control within the industry in reaction to CRM2. By contrast, online investing platforms and robo-advisors are inherently built to deliver maximum value on minimal fees, while not compromising on product offerings or service levels."

Mr. Gauthier added, "The impact of fees can be devastating for an individual's wealth over time. High mutual fund fees or excessive investment advisory fees can eat up more than half of an investor's savings over their investing lifetime. The savings from using a robo-advisor, which typically charge one-third to one-half the fees of a traditional option, can be massive."

While Canadians are cost-conscious when it comes to investing, more than 80 per cent of survey respondents are not familiar with the services provided by robo-advisors.

"Robo-advisors have been around in Canada for a few years now, but awareness of what they are is still quite low," continued Kirkland. "We're confident that as CRM2 comes into effect and Canadians understand the fees they're paying for their investments they will begin looking for more cost-effective solutions. Looking forward, online investment management will have a big role to play in a more transparent, equitable investing services environment."

The survey was conducted via Google Consumer Surveys. Canadians surveyed ranged in age from 25 and up, in all provinces and territories.

About Justwealth Financial

Justwealth is Canada's most comprehensive online investing platform, offering over 60 different portfolios, customized to meet each investor's needs and goals. It is made of investment industry experts looking to change the way investment advice is provided in Canada, and to treat clients as they themselves would like to be treated: justly. Justwealth is registered to serve residents in all ten Canadian provinces.

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