The latest annual survey of Canadian investors from the Securities and Investment Management Association (SIMA) and Pollara Strategic Insight finds 67 per cent believe it is better to get professional advice during uncertain economic times.
It also finds 30 per cent say they are investing less as the Trump trade war rages on, yet 86 per cent claim to be “highly satisfied” or “completely satisfied” with their advisors.
According to the survey results, most respondents agree advisors give them confidence in reaching their goals and help them achieve better returns.
They say advisors improve their saving and investment habits, help them stay disciplined during downturns, and the fees they pay are worth it.
Counting on advisors for credible information
The survey also reveals that of the 38 per cent who invest without advisors through discount brokerages, one-third turn to so-called online ‘finfluencers’ when making investment decisions.
In contrast, most investors with advisors say they often rely on them for credible news sources and research tools.
Finding credible advisors
Finding a good advisor, however, isn’t easy. Finance industry advisor titles and definitions vary but the national self-regulatory investment body, the Canadian Investment Regulatory Organization or CIRO has imposed a 2026 deadline to force members to earn a defined title of Financial Advisor.
The new rules require wannabe advisors to meet minimum standards of education, and abide by a code of conduct.
Currently, anyone can hang out an “Investment Advisor” shingle and there is no legal requirement for the advice they give to be in the best interest of the investor (other than a registered fiduciary, which is rare).
Someone who draws a commission from selling a certain brand of mutual fund, for example, is permitted to act in the best interest of the mutual fund company just as a car vendor can act in the best interest of a car company.
How the “Know-Your-Client” rule can empower investors
One legal line of defence currently available to average investors is the Know-Your-Client (KYC) rule.
Under the KYC rule, advisors must complete and update a form with each client to determine the client’s general understanding of investing, tolerance for risk and investment goals before determining “whether a recommendation is suitable for a client and puts the client’s interest first” as they age and move toward retirement.
A common example of the KYC rule that has held up in court prohibits advisors from putting clients in high-risk ventures the client doesn’t understand.
Investment firms must also ensure the rule is being maintained and enforced on behalf of their advisors.
The Know-Your-Client rule works both ways
Many Canadians who invest through advisors have already seen these forms but they may not see the opportunity in turning the tables to determine if their advisors are “suitable”.
Here are a few talking points beyond KYC to consider when the next questionnaire comes along:
- Long-term investment strategy and asset allocation to get you to your retirement goals.
- The advisor’s access to credible research to find the best investments in the best sectors and geographic regions.
- Tax saving strategies that effectively utilize registered accounts such as registered retirement savings plans (RRSP), tax free savings accounts (TFSA), and in some cases non-registered investment accounts.
- Breakdown of how fees are generated and strategy to lower them as the portfolio grows. Wealthy clients often pay less than one per cent, which explains why the best advisors tend to focus on a few wealthy clients. There should come a time where any portfolio outgrows high-fee mutual funds in favour of direct investing.
Most important, advisors should keep in touch more often than the basic KYC requirement through regular client newsletters or one-on-one contact in times of market volatility or major life changes.
