August 21, 2018 09:45
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A survey of the consulting firm J. D. Power indicates that 79% of canadian investors don’t know about the second phase of the client relationship model-adviser (MRCC2). What’s more, only 49 % of those who know the MRCC2 say they have noticed changes in the disclosure.
These data have been published, while theinvestment funds Institute of Canada (IFIC) is preparing to conduct a study on behavioural economics and how it can improve the disclosure about investment funds.
An ongoing challenge
“The low awareness and understanding of MRCC2 poses an ongoing challenge and proves to be an opportunity for firms and financial advisors,” says Mike Foy, director of the practice of wealth management at J. D. Power.
“Although the fears of the industry that the new report on the costs and performance creates an exodus of investors are not met, the risk of defection is always there. The study suggests that the best way to deal with this risk is that the councillors discuss proactively and regularly of the costs and performance with their clients, rather than let them decipher for themselves. “
Investors more faithful
The results of the survey also show that investors who know the MRCC2 and have noticed the changes in their report, in addition to actually explain everything by their advisor, include more fees they pay. Among these, 55 % say they have a full understanding of their costs, compared to 32 %.
In addition, they tend to be more loyal to the firm with which they do business. In fact, 58 % of them said they will definitely remain with their firm for a year or two.
Adoption of the robot-board to save on costs
Although all age groups are aware of the robots-advisers (43 % among baby boomers, 45 % among generation X and 48 % in the milléniaux), the milléniaux are more likely to adopt the technology. J. D. Power reports that 22 % of them have used the robots-advice, and that 52 % of those say they did so to take advantage of costs lower.
Among the people from the X generation, 9 % claim to have used the robots-advisers, while this rate was 3 % among baby boomers.