Investors’ Trust in Financial Advisors
Do Canadian investors trust their advisors?
While many Canadian investors trust their advisors completely, many don’t, too. Credo asked more than 12,000 investors who work with an advisor to indicate whether or not they trust their advisor completely. We used an agreement scale from zero to ten, where a score of zero indicated complete disagreement with the statement and a score of ten indicated complete agreement. The graphic above presents an image of the distribution of responses to our question. It shows that about ¼ of advised Canadian investors agree completely with our bellwether statement; the average score was 7.77 out of ten.
It is somewhat concerning that there is a substantial tail in the distribution that sits well below the average score. In fact, a substantial proportion of Canadian investors offered scores of five or below. These investors are significantly more likely to be in search of a new advisor than those who trust their advisors greatly. We say they are “at risk of defection,” when they indicate that they are seeking a new advisor.
Understandably, there is considerable variability in the data we collect. A simple graphic like the one presented above hides the fact that some advisors score really well with respect to trust and others, less so. In fact, when we analyse the many responses we generate, we can see that there are trends with respect to investors’ trust even at the dealership level. Some dealerships have advisors who generate trust scores well above the industry average score of 7.77.
Canada’s Most Trusted Dealerships
Investia, for instance, earned an average trust score among investors who work with their advisors of 8.64 and Richardson GMP earned an impressive score of 8.55. Two of the bank-affiliated dealerships also earned top-five scores: RBC DS with a score of 8.46 and BMO NB with a score of 8.38. Assante rounds out the top five with a score of 8.41. While this is not to say that these dealerships don’t have some issues with their advisors and trust, they are certainly better positioned than many of the dealerships in the industry.
So What? Advisors need to be aware of the idea of client loyalty; it’s something that has great potential to affect them. They need to manage their activity in ways that continually contribute to client retention. Recognize that, while it might be nice to think that all of your clients love what you do for them and how you do it, the reality is that you’re likely not delivering ideal experiences to each and every client; you have to be vigilant and you have to tailor the experiences you deliver in order to retain your valued clients.
 Credo is pleased to include select advisors from each of these firms in our unique referral generation systems. Credo provides a number of specialized services to the investor and advisor communities. These services include referring investors to advisors who fit their needs when we are approached by investors who are looking for a new advisor. We also enable advisors in finding new clients by providing tools that point new clients in their direction.