The financial advisor role is ‘evolving’ as Canadians’ goals broaden

Eighty-eight per cent of Canadian financial advisors provide their clients financial coaching, helping them stay on-track during periods of market volatility. That’s according to research published today by Edward Jones and Cerulli Associates.

“In an era where financial choices are increasingly complex and emotionally charged, this study reaffirms the notion that the advisor’s role is evolving,” said Tracey McLennan, director, client consultation group at Edward Jones Canada in a media release. “Advisors are not just guiding investment strategies, they are helping clients filter out the noise, keeping the focus on what truly matters and making decisions aligned with their short- and long-term goals in mind.”

The study of advisors and investors was conducted in the first quarter of this year, a time when many grew anxious about the threat of a global trade war.

Despite the volatility that triggered, 61% of Canadian investors told researchers they are optimistic about their finances. By comparison, 74% of U.S. respondents said the same thing. In Canadian boomers are the most optimistic — 72% responded that way versus 58% of Gen X investors and 53% of Millennials.

“What Canadians are seeking advice on is financial fulfillment. That means different things to different generations. But what they all want is to feel financial peace of mind,” said Julie Petrera, senior strategist, client needs at Edward Jones Canada in an interview.

“It’s not about returns, it’s not about investment objectives,” Petrera said. “It’s about what problems money can solve. What can money enable?”

Researchers found that 47% of Canadians define financial fulfillment as “having the freedom to pursue their passions.” Just over one-third said that means “worrying less about money” (38%) or “spending more time with family and friends” (35%).

However it’s defined, financial fulfillment is out of reach for many. Three in five investors (62%) told researchers that they wouldn’t be able to afford an emergency expense of $10,000 or more.

Self-directed investors

Despite efforts by advisors to play more of a hands-on role in choppy markets, just 40% of Canadian investors said they count on a financial advisor regularly. Young Canadians are most likely to chart their own course — 73% of Millennials prefer a do-it-yourself approach.

Petrera said it’s difficult for these DIY investors to achieve the kind of financial fulfillment the study focused on. “I don’t believe that bitcoin provides financial fulfillment,” she said.

“The potential for a really positive advisor-client relationship has to do with how that person thinks about money, how they think about risk and really absorbing those best practices into the way that they live with money over the course of their lives. Buying AI stocks, bitcoin and all the rest — that’s not consistent with financial wellness.”

Among respondents with a financial plan, 69% said they are confident about their future. Just 48% of those without a plan said the same.

The top reason for not working with an advisor, according to the study, is “high fees/costs,” noted by 46% of investors.