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Small investors receive little guidance, according to a survey



6 August 2019 13:30

Photo : Freepik

A survey of the investor advisory panel of the securities Commission of Ontario reveals that, in many cases, the basic concepts of financial planning are not addressed in the advice provided to investors.

During the publication of the report on 29 July, the group said that nearly a third of the 3,000 investors in the mass market and general public surveyed were unable to say whether their advisor had spoken of concepts like planning for retirement, education or saving for a house.

More than half said they have communicated that in a way short and not very frequent, or even not to have received any communication from their advisor during the last year. These investors say, however, that they are getting information on topics important investment.

The results raise important questions

“The survey results raise important issues about access to advice sufficiently comprehensive and timely for investors in mass markets and the public at large to respond effectively to their needs, they pay for it, often through systems of compensation built-in, such as trailing commissions, that are proved to be carriers of the risk of conflicts of interest adverse,” the report says.

In addition, 60 % of investors in the mass market, and 75 % of investors with smaller portfolios have stated that their counsel had not communicated with them only once or twice in the course of the last year, or not at all.

The counselors spend little time with their clients

Nearly half (49 %) of these investors have also indicated that their advisor had spent less than an hour in total to communicate with them in the course of the last year, or that he has not done. Two-thirds (68 %) of small investors and 44 % of high net worth investors have said the same thing.

The chairman of the Group, Neil Gross, has said he hoped the data would help decision makers to assess the potential impact of the prohibition of the use of commissions of follow-up.

“We wanted to assess the extent to which small investors and those of mass markets were actually tips to help you better understand the consequences — as some argue — that the elimination of commissions as part of could have on their access to advice to which they were already entitled,” adds Mr. Gross.

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