Three ways financial advisors can earn client trust 

The trust that Canadians have in financial advisors, the financial industry and digital advice turned more positive last year, after an extended period in which all three measures declined gradually. This year though, researchers at PMG Intelligence expect those numbers to soften again because of market volatility. 

PMG’s insights are drawn from the aggregation of syndicated studies over a 10-year period.  

Between 2017 and 2023, trust in financial professionals declined 11 points, from 54% to 43%. Over the same period, trust in the financial industry fell to 40% from 46%. We have results on robo-advice dating back to 2019. Between that year and 2023, trust declined from 25% to 18%.  

We saw an increase in trust across the board in 2024, as markets rebounded and inflation appeared to have weakened. However, increased market volatility and the uncertainty associated with a potential trade war with the U.S. has us forecasting a decline in trust this year, back to 2023 levels or even lower.  

Trust matters 

Investors who work with a financial advisor note higher trust than those who don’t. But only three in five of those who work with a financial advisor say they have a trusted relationship with that advisor.  

Clients who report higher levels of trust are more likely to be completely satisfied and continue using their financial provider. They’re also 1.5–1.7 times more likely to refer their advisor to someone else, in comparison to those who only somewhat trust their advisor. 

These clients use more products and dedicate a greater share of wallet to their advisor too. They are 1.8 times more likely to invest in ETFs, 1.7 times more likely to invest in RESPs, 1.7 times more likely to invest in GICs and 2.5 times more likely to invest in segregated funds. 

Trust has quantifiable implications on client acquisition, product use and profitability. 

The investor experience 

People come to value professional financial advice as their finances grow more complicated and they have more money saved. Interest in working with an advisor typically peaks between the ages of 30 and 34. The $50,000 threshold is another key marker.  

Ironically, too many prospective clients at that stage of life are rejected or redirected to DIY solutions. Up to 35% of investors with under $100,000 of assets, regardless of age, are told they don’t have enough money and are better suited for digital solutions.  

This tiering of access to financial advice is driven by profitability and the need for scale by both financial providers and advisors. Given Canadians’ declining trust — particularly with digital advice — this is remarkably short-sighted. 

Advisors and firms open to onboarding investors earlier in their asset accumulation phase will have a head start on solidifying their position as primary provider; a decision clients generally make between the ages of 40 and 45.  

Three ways to build trust 

Our analysis of the data points to three actions that advisors can take to earn Canadians’ trust. 

First, the industry needs to take a fresh look at a tiering advice model for younger investors with lower assets — particularly those with $50,000 or more of investable assets at or near age 30. Establish a face-to-face advisory relationship with young investors, no matter their wealth. 

Second, promote the delivery of a documented financial plan. Our research confirms that 70% of those with a written financial plan trust their financial advisor. Just 39% of those without a written plan say the same. Investors are also more likely to invest if they have a plan written by a professional advisor. They’re 26 percentage points more likely to plan a GIC or mutual fund investment, and 20 points more likely to plan an equity or fixed income investment.  

Third, contact your clients proactively. The research highlights that proactive contact and service can have a meaningful impact on trust. And while even one contact per year can move the needle, the sweet spot for maximizing trust appears to be two to three contacts per year. That level of activity reinforces the trusted nature of the relationship. 

These steps are foundational to establishing and reinforcing a trusted financial relationship. The results will benefit financial providers, advisors and most importantly, investors.