Hennick Wealth Management

Hennick Wealth Management

August 10, 2016 11:21 ET

Overconfidence Crisis? Canadians Claim 95% Confidence in Advisors

Trust Index Reveals Financial Advisors Have Canadians' Confidence, but Is It Deserved?

TORONTO, ONTARIO--(Marketwired - Aug. 10, 2016) - While many Canadians say they prefer to manage their own finances, those who do use an advisor are surprisingly satisfied with their advisors' acumen, according to a recent Hennick Wealth Management survey. That confidence may not be warranted according to Investment Advisor Adam Hennick, who thinks some Canadian investors are just too complacent.

The Hennick Wealth Management survey was conducted to determine who Canadians trust most when it comes to handling their money. Although 44% of Canadians felt they were the most capable of investing and managing their own money most effectively, the survey showed Canadians still have a surprisingly high level of confidence in the expertise of financial professionals such as bankers, financial planners and investment advisors.

An overwhelming majority of Canadians who use a financial advisor reported extremely high levels of satisfaction with their advisors' services. Asked to score their advisors on various areas of their services, only 1-5% of respondents reported dissatisfaction. But according to Hennick, this high level of satisfaction may have more to do with complacency than competency.

"As much as I would like to believe that 95% of financial professionals in Canada are doing a bang-up job for their clients, it's simply not realistic for any industry. This survey should set off red alert sirens that Canadians are too apathetic when it comes to their financial advisors' performance," said Hennick. "Canadians need to be a little less polite, ask more questions of their advisors, and ensure that they are getting the best performance possible for their portfolio."

Key Findings of the Survey:

1) Financial professionals got high marks on the trust index. Politicians… not so much.

Respondents were presented with a list of people that might handle their money (albeit some indirectly) and were asked to pick their "top three choices of whom they trust most to make sound financial decisions." Overall, the results put financial professionals at the top of the trust index, while politicians were firmly at the bottom:

  • Financial Planners were most trusted to make sound financial decisions at 61%, but other finance professionals also had respectable showings including Accountants (58%), Investment Advisors (54%), and Bankers (47%)
  • Spouses also ranked high on the trust index at 40%
  • Insurance Brokers received only 9%
  • Realtors received only 4%
  • Politicians (not surprisingly) were toward the bottom of the index including Members of Parliament (3%) and City Councilors (3%)

2) Many Canadians (more likely men) trust themselves most to handle their finances:

  • When asked, "Who do you feel is most capable of helping you invest or manage your money most effectively?" 44% of Canadians surveyed answered "Myself"
  • Men were much more likely than women to say "Myself" (55% versus 33%)
  • Other responses included Investment Advisor (18%), My Bank (14%), Financial Planner (12%), Spouse (8%), Accountant (4%), and Insurance Broker (< 1%)

3) Canadians who currently have a financial advisor were extremely (perhaps too?) satisfied:

  • 36% of Canadians surveyed said they work with a financial advisor
  • When asked if their financial advisor "Adds value by growing my investments every year" a shockingly low 3% disagreed
  • When asked if their advisor "Can be trusted to act in my best interests" only 1% of Canadians disagreed
  • when asked if their advisor "Understands investments much better than I do" only 1% disagreed
  • When asked if their advisor "Provides me with valuable advice" only 1% disagreed
  • When asked if their advisor "Doesn't use a cookie cutter approach to my investment portfolio" only 1% disagreed
  • When asked if their advisor "Can make good decisions without oversight" only 5% disagreed
  • When asked if their advisor "Is approachable when I have questions" only 1% disagreed
  • When asked if their advisor "Has given me a very clear understanding of what I'm invested in" only 1% disagreed

4) Canadians agree that women and men are equally capable giving sound financial advice.

  • When asked, "Who would you trust more as a financial advisor, a man or woman?" a whopping 85% of Canadians said it didn't matter, either sex was equally capable.
  • 9% said men
  • 6% said women

"There are some great financial advisors out there, but you should never be afraid to question what they are doing with your money," said Hennick. "No one cares more about your money than you do. Don't just take your advisor's word for it when they say that your portfolio is doing as well as it possible within your risk tolerance parameters. Probe with questions and check into it."

About the survey

Conducted by Environics Research Group, the online survey was conducted among 1,067 adults from Monday, June 27th - Thursday, June 30th, 2016. In order to qualify for this survey respondents had to be 18 years of age or older and reside in Canada. Of those interviewed, 389 adults stated that that they are currently working with a financial advisor.

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