Do Canadian Advisors Trust Fund Companies?

Short answer… sure they do.

Longer answer… they trust some more than others.

Even longer answer… for financial institutions that are trying to build or maintain a relationship with financial advisors in order to sustain their distribution system, trust is critical.

Financial advisors certainly need their clients to trust them, otherwise they simply don’t have a business. They spend their time building relationships and demonstrating that they have their clients’ interests at heart and that they are dependable. And, if you ask them, their suppliers — fund companies and asset managers — have to do exactly the same thing.

Whether they are independent (the blue line in our graphic), bank-affiliated (the orange line in the graphic) or ETFs (the green line), fundcos have to convince advisors that they are worthy of the financial advisor’s trust. This is critical because the advisor’s business involves hanging his own reputation on the line with the fundco recommendations that he makes to each of his clients. If an advisor will put his faith — and, perhaps more importantly, his clients’ life savings — in a fundco’s products, that company has to be trustworthy. So…

Credo measures the trust advisors have in Canadian fund companies.

This is an organization you can trust

For years, Credo has been asking Canada’s personal financial advisors to react to a simple statement, “this is an organization you can trust: agree or disagree?” We have advisors consider the companies they work with, whether these be independent fundcos, bank-owned fundcos or ETF manufacturers. Tens of thousands of data-points collected over the years give us confidence that we effectively measure the evolving levels of trust advisors have in their financial product suppliers.

Independents Lead the Way

Among advisors, the most trusted group of fundcos are the independent fund companies. Think AGF, CI, Fidelity, Franklin Templeton, Invesco, Mackenzie, Sentry or Sprott. There are a substantial number of strong and trusted independent fund companies that advisors turn to on a regular basis largely because they are seen as trustworthy.

ETFs are Close Behind

Advisors have developed a significant level of trust in ETF suppliers, too. Only a couple of years ago, our measurements for the ETFs were substantially lower than they are today. Companies like BMO ETFs, Horizons, iShares and Vanguard have done a superb job of gaining advisors’ trust. This group of companies, impressively, now scores higher in advisors’ minds than the bank-affiliated fund companies.

Banks Trail, But Make Gains

Lagging, somewhat, behind the ETFs and the independent fund companies are the bank-affiliated fund companies. There’s a very clear set of reasons for this lag and the roots of these reasons are largely competitive. Much of the advisor community sees the banks as a stable, stoic monolith that it interested in delivering greater value to shareholders than to the individuals who would invest in their funds. They are so large and powerful that they constitute a threat to independent advice. (Whether this is true or not is certainly a matter for debate.)

Which FundCos are Most Trusted?

If you’re interested in knowing which companies are the most trusted by financial advisors, give us a call. We’ll be pleased to discuss!

At Credo, we like to think that if you don’t measure it, it’s hard to manage it.