Get Answers To Tough Questions

The Human Dimension of Financial Advice

Advice Your Way
  • Key Findings

  • When Financial Priorities Shift,
    Look to an Advisor for Professional Advice

    2020 - a year that we’ll not soon forget. It’s shown us that life can change on a dime and with it how our priorities will shift.

    For Canadians, the fallout from COVID-19 has many re-evaluating their financial priorities. A recent survey1 showed that 8 in 10 Canadians were rethinking them. Since the pandemic began, the survey found that many were questioning if their retirement savings will allow them to live the life they’ve planned in their work-free years, or if they need to do more to bulk up their savings. Others are concerned about the stability of their income and their short-term cash flows.

    More than ever, investors are looking to financial experts for guidance to help them make the right decisions or get answers to tough financial questions. Since the pandemic began, 33% of investors surveyed say they have been speaking with their advisor more frequently.

  • While some Canadians choose to go it alone, an overwhelming majority believe that financial advisors have a positive impact on their lives, their families and their futures.

    • Desire for Good Advice

      A poll2 of 500 Canadians who were at least 30 years old with $100,000 in minimum investible assets, revealed that 75 per cent of investors turn to a financial advisor for advice. Anyone who’s ever bought a house, started a family, built a business, sold a property or business, contemplated retirement, or transitioned wealth to their next generation – just to name a few significant milestones in life – will likely be familiar with that desire for good advice.

    • Achieving Financial Goals

      Additionally, the survey found that 82 per cent of people who consult a financial advisor said that relationship had a positive impact when it came to achieving their key financial life goals.

  • Key Findings

Advisors provide a return on life,
not just a return on investment.

  • The Value of Advice

    Financial advisors impact the lives of their clients in many ways, and different investors see different advantages in working with a financial advisor. Among those surveyed, the three top reasons for having a financial advisor were:

    • Robust

      Better Risk Management

      Ensuring their investments withstand market volatility

    • Informed

      Greater Financial Oversight

      Staying on top of their financial situation

    • Timely

      Access to Expert Advice

      Receiving timely financial information and education

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  • But there are other, less tangible, reasons for working with a financial advisor

    Advisors provide a return on life, not just a return on investment. They are experts in their field and are trained to take an all-inclusive approach when assessing a client’s financial situation, rather than just analyzing their investment accounts.

    A good advisor, one who focuses on nurturing deep relationships with their clients, will help them make decisions about their wealth for the immediate future, middle future and distant future. They will also focus on helping the next generation accumulate and grow their wealth or prepare to inherit and protect their family’s legacy.

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  • The Value of Advice

    A valuable advisor doesn’t just provide investment advice; they share wisdom. That’s because an advisor takes the time to gather intimate knowledge about the primary client, understand their personal preferences, recognize their fears or hopes, and gain knowledge about that client’s heirs before they provide any advice. This is where the true value of an advisor emerges.

  • Advisor Image

  • Life Events that can Benefit from Advice

    As people move through life, their situations change – often becoming more complex as assets are accumulated and families grow. Plans change too, and they’re not something you can “set and forget” as the pandemic has shown us. An advisor can help you adjust your plans as your circumstances change.

    Events beyond our control, such as a job loss, cancelled wedding, changes in lending rates, a sudden windfall, or a death in the family, can have a direct impact, either positive or negative, on a person’s finances, too.

  • When asked about the most important moments in life where financial advice can be valuable, repondents said:

    • 67%

      When approaching retirement

    • 64%

      When receiving an inheritance or windfall

    • 58%

      When you begin earning

    • Good advisors help investors stick to their plans when market volatility makes them waver.

Advice When
Money is in Motion

The events that affect one’s financial priorities happen from the time a person starts making money to the time they’re drawing down their savings. Financial advice is needed any time that money is in motion.

  • Findings

  • The Human Dimension

    • Real Conversations
    • Deeper Insights
    • Personal Resource
    • Advice When Needed

    • Google is great for background research and podcasts work well for one-way conversations. But 81 per cent of people polled said they preferred to deal with real live financial advisors rather than doing it themselves. Formula-based computer programs tend to funnel people into investments based on their answers to a set of 10 to 12 standard questions. Human advisors, on the other hand, have the ability to ask dozens of questions to really understand their clients and ensure their financial needs are addressed holistically, from every angle.

    • Indeed, humans “go deeper” because they can engage in a two-way dialogue. After asking a client when they want to retire, for example, advisors go deeper by asking them to think of people whose retirement lifestyle they admire and those whose retirement they don’t. This, and other relevant information, gives an advisor greater insight into their client’s aspirations and how to fund a fulfilling retirement.

    • When it comes to which resources people turn to for learning about finances, respondents said:

      • 75%

        Prefer consulting with a financial advisor

      • 27%

        Books and online resources

      • 25%

        Consult with family

      • 14%

        Ask friends

    • The oldest group surveyed, those over 70 years, indicated they were most likely to seek advice from a financial advisor. Not surprisingly, the youngest cohort was most likely to seek advice from family members, books and online sources, such as blogs, social media posts, YouTube videos, and traditional news sources.

Human Touch

Advisors can be instrumental in preventing inter-generational friction

There are differences in the behaviour of people who are just starting out in their careers and ramping up their savings versus those who are beginning to draw down on their investments, after a lifetime of work and life experience. It’s natural for people of different ages to want to do things differently, but that can sometimes cause friction in a family.

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    Findings from our updated survey:

    60%

    Believe the convenience of connecting with their
    advisor virtually is increasingly important

  • Helping Reduce Friction

    On one side, younger family members might be changing careers, moving to a new location, or planning to renovate a home. On the other side, older adults are conserving their money for 20-plus years of retirement or thinking of how to make a positive impact on their estate.

    A financial advisor can help reduce friction and build an integrated financial plan that ensures family members appreciate and understand one another’s goals.

    In fact, due to the adoption of new communication technologies, good advisors are flexible and will conduct virtual family meetings, where multiple generations of one family get together to learn and share ideas. By providing advice virtually, boundaries like geography and busy schedules are now easily overcome, allowing for meaningful, in-depth discussions that can take place at your convenience and on your terms. Multi-generational conversations are another example of the human touch that financial advisors bring to the table and how they can provide advice your way.

  • Key Findings

  • Balancing Costs with Value

    For 58 per cent of those surveyed, fees do indeed have an impact on their willingness to seek financial advice. However, almost three quarters (74 per cent) said they understood the costs of having a financial advisor, and close to seven in ten (69 per cent) indicated that they are willing to pay for financial advice.

    • Savings through Guidance

      Not paying someone to help with financial plans and guidance can have a cost, too. One IPC Advisor shares the example of a client who had enough resources for a comfortable retirement. But, by following a custom recommended plan, the client was able to save a significant amount of money in taxes, which far outweighed what they were paying in fees.

    • Long-term Value

      It’s important to recognize that the kind of advice provided by good financial advisors goes well beyond stock picking and investment recommendations for short-term gains. Financial advisors provide robust, relationship-based guidance for individuals and families over years and decades. Throughout the years, the advice they give can have a very significant impact on the lives of their clients.

The kind of advice provided by good financial advisors goes well beyond stock picking and investment recommendations for short-term gains.

Finding the Right Fit

Financial advisors aren’t one size fits all. Here are six tips for finding a financial advisor who can help you achieve your goals:

  • Ask friends and family for recommendations

    The people closest to you share a lot of your interests and want what’s best for you. Find out whether they have a trusted financial advisor, why they like her or him, and whether they think their financial advisor might be right for you.

  • Interview more than one contender

    Set up meetings with at least three candidates. Remember, you’ll likely be working with this person for several years or more, so you want to ensure a good match.

  • Do a credential check

    To narrow down your candidates, find what credentials they hold. Financial advisors can be accredited as Certified Financial Planners and they can hold other designations as well. If you don’t know what a designation stands for or means, just ask.

  • Look for a listener

    When meeting with potential financial advisors, make sure they’re listening to you more than they are talking to you. You don’t want to hear a standard speech. You do want to hear that they’re taking the time to understand who you are and what you need.

  • Look forward and back

    Your chosen financial advisor should know your financial history and your future goals. Just knowing your current investible assets isn’t enough to help craft a complete financial plan.

  • Beware of product talk

    If your advisor talks about financial products in your first meeting, you should question their intentions. First meetings are about exploring and making big-picture plans. Financial products are just one small piece of the puzzle and should be decided on only after a plan is created.

Speak to an
IPC Advisor

If the current environment has you re-evaluating your priorities, we’re here to provide you with professional advice and guidance that makes sense for you and your family.

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1 The study was conducted August 13 – August 27, 2020, in partnership with Environics Research with results drawn from an online sample of 1,000 Canadian investors with $100,000 or more in investible assets that are 30 years old.
2 Based on an Investment Planning Counsel (IPC) survey of 500 investors with over $100,000 in investable assets. Survey conducted by Environics Research Group, April 2019.