CRM2 heralds a new conversation about the value of advice


Research shows that for most people, working with a financial advisor is the key to accumulating wealth.

“Advisors help investors adopt good savings and investing habits that stay with them the rest of their lives,” says Blake Goldring, chairman and chief executive officer of AGF Management Limited. “This provides them with greater opportunity for future investment growth and retirement readiness when compared to those who don’t work with advisors.”

The baby boomer generation are nearing retirement and people are living longer than ever before, so there is an obvious emphasis on saving and retirement income, he adds. “Advice from a financial advisor helps keep investors on a realistic path.”

Advisors take a holistic approach to helping investors navigate key milestones and turning points in their lives, Mr. Goldring points out. Canadians tend to seek advice at certain stages such as marriage, the birth of a child or retirement. But financial advisors can also help their clients successfully navigate difficult and unexpected events, such as the loss of a job or the impact of economic downturns on their business or investment portfolio.

“Studies also show that clients who work with a trusted advisor are better able to plan their financial future – and most importantly, they feel more confident about that future,” he notes.

A relationship with a financial advisor may also translate into better investment returns as advisors help their clients better understand market trends and avoid the perils of emotion-driven investment decisions. “Educated investors know market downturns are part of a cycle and take a long-term perspective about investing.”

The majority of Canadians look to trusted sources before they commit to financial investments, despite the fact that the Internet makes more information available than ever before. “While it is important for investors to have access to this information, there is a difference between information and advice,” says Mr. Goldring. “You can’t replace the value of working with a trusted professional who has your best interests at heart.”

Mr. Goldring stresses that CRM2 is a positive development for Canadians as it will bring greater transparency on both fees and performance. “Whether it be research, financial planning, risk assessment or simply explaining market moves, financial advisors provide a valuable service and should be compensated for the value they provide.

“CRM2 provides the opportunity for advisors to demonstrate the many ways they provide value to clients.”

Paul Lorentz, president of Manulife Investments, agrees. “A lot of times, mutual funds fees are compared to the costs of other investment options – but mutual fund fees usually include the value of advice. It’s something that is often overlooked and needs to be considered when comparing investment options.”

The 2012 Value of Advice study by Ipsos Reid for The Investment Funds Institute of Canada showed that households that use a financial advisor save at twice the rate of households that are passive investors and not using an advisor, notes Mr. Lorentz.

“The true value of advice is the role that advisors play in financial planning and in helping their clients create the discipline to save more,” he stresses. “If you look at the role that mutual funds have played in making independent financial planning available to consumers, in my mind, you cannot even put a price tag on that value.”