As the first days of the pandemic show, investors were stressed but satisfied with the advice they received from advisors Questionnaire released Wednesday by the Ontario Securities Commissions (OSC).
In a survey conducted in early April, almost half of respondents (47%) said they were experiencing increased levels of stress. This situation can “dramatically affect investment decisions by reducing a person’s willingness to take risk,” the study said.
However, the survey found that the vast majority of investors (85%) suspended all their investments during this period of market volatility.
Those who were more likely to have sold no investments had advisors, low financial knowledge and low levels of stress when thinking about their investments.
A small but significant number of respondents (7%) sold a large portion of their investments – at least 20% of their portfolios.
The OSC noted that there was insufficient data on respondents to assess whether they should have sold or retained in response to the pandemic or whether they sold due to financial difficulties.
However, the survey found that 50% of respondents said that an advisor’s advice is the most important information they receive when making a buying or selling decision.
Pandemic-related communications and advice
The majority of respondents with advisors (74%) communicated with their advisors during the pandemic (the survey included robots among advisors). Nearly half talked to their advisors (46%), 17% received informational messages and 11% received some other form of communication.
The remaining 26% did not contact their advisors.
Of the 46% of respondents who spoke to their advisors, approximately 29% said their advisors had contacted them, 13.5% had contacted them themselves, and approximately 4% of respondents had contacted their advisors after receiving informational messages.
The most common topic of conversations between the advisor and the client were economic and market events (37%), followed by changes in the portfolio value (24%), financial plans (18%), and the client’s professional, health and financial needs (17%).
Overall, the majority of investors (81%) were positive about their advisors’ advice during the pandemic. This figure included 18% of respondents who rated the advice as ‘excellent’, 35% who rated it as ‘very good’ and 28% who rated it as ‘good’.
A significant minority – 19% – were not impressed with their advisors’ advice, rating it as “fair”, “poor” or “very poor”.
Because the advice question was asked only to investors who had received advice since the beginning of the pandemic, the question did not necessarily indicate how they viewed the advice they typically received, the OSC said in its summary report.
Why clients change advisors
When asked if they had ever changed advisors, about four in 10 respondents (44%) said yes, and another 7% said they would like to change. People who were retired and had more invested assets were more likely to change jobs.
The most common reasons for switching were advisor leaving (32% of respondents), finding a preferred advisor (31%), dislike of the advice or services received (27%), and low rate of return (17%). Fees were mentioned by 13%.
Home leave clients shouldn’t worry most advisors: the majority of respondents said they were satisfied with their advisors’ services and advice (83%).
Another positive finding was that almost all respondents who received advice (95%) said that advisors ask about investment goals, risk tolerance and time horizon. For those who had ever changed advisors, the percentage was even higher – 97%.
For detailed information, please read survey of OSC investor experiences.
OSC survey information: Leger conducted an online survey of 1,942 Canadian investors from April 1-12, 2020, using the Leger online panel. To qualify, investors had to have investments beyond Canadian savings bonds, segregated funds or pension plans. They also had to invest with an advisor (69% of respondents), an online investment service (7%) or on their own (23%).
In its summary report, the OSC said it would use the survey to “improve investor education and support retail investors in today’s complex and uncertain investment environment.”
