We don’t always know how to go about accessing trustworthy financial advice. Finding the right person seems to be as tedious as getting an appointment with a psychologist in the public network.
It’s not for nothing that the web is full of instructions in six or seven easy steps for finding a professional.
Despite everything, 73% of Quebecers did not have a financial advisor 1, according to the latest news (average of 65% in Canada). This general term includes all the people who help us manage our money.
Some savers believe that their assets are not large enough, others fear not understanding the jargon used or fear that their past decisions will be judged. Added to this is the distrust linked to the independence, remuneration or transparency of the professional. Other people do not believe they need support, their knowledge being sufficient. The risks of fraud are also mentioned in the long list of fears.
The shortage of financial planners is also part of the problem. For around ten years, their number has been stable, at around 5,000, while the population and needs have grown.
The fact that 40% of financial planners are over 50 years old demonstrates that there is a succession issue, argues the CEO and secretary of the Quebec Institute of Financial Planning (IQPF), Chantal Lamoureux. Its members are the only experts to speak out in seven areas of expertise related to money such as taxation, retirement, inheritance and investments.
As for collective savings representatives and investment advisors – those who sell mutual funds and stocks – the specialized publication Finance and Investment notes that the number of households able to count on their services decreases from year to year.
These professionals are targeting increasingly wealthy savers as pricing based on total assets held gains traction, while commissions and compensation per transaction lose popularity. It is therefore more profitable for them to work with a reduced number of clients with very large assets. Those who work for a full-service broker like Desjardins Securities or National Bank Financial had an average of 237 clients in 2018. This number increased to 227 in 2020, and to 178 this year2.
These data highlight the growing difficulty for the middle class, those who do not have $600,000 in savings to invest, to have access to more sophisticated financial services.
This does not mean that the advice given in bank branches and Desjardins credit unions is not of quality. But the variety of financial products offered is limited and staff turnover often irritates clients who want to build a relationship. “The only time I saw the same person twice, I found her so incompetent… that explained why she hadn’t moved,” a work colleague told me, lamenting that the best are always transferred thanks to promotion.
Another colleague lamented that at his bank, no professional had been assigned to him since the retirement of the one who took care of his investments. “It’s confusing, I think. Increasingly depersonalized as a service. » Nothing to make him want to return there regularly to seek advice and develop a plan for his retirement.
Unfortunately, independent financial planners paid by the hour are rare and their services are not within the reach of all budgets.
The lack of a relationship with a reliable advisor is a shame and often… damaging. Americans also estimate that their lack of financial knowledge costs them US$1,800 (CAN$2,475) per year.3.
The list of bad decisions that can have costly consequences is easy to draw up: not opening an RESP when a child is born, not having a will, poorly dividing your investments between your RRSP and your non-registered account, applying for your pensions public too early, buying cryptocurrencies without knowing anything about them, lark!
Take the Quebec Pension Plan. Starting next January, workers aged 65 and over who are already receiving their pension will be able, or not, to continue to contribute to the plan.4. “It is a great danger to make this type of decision without knowing all the impacts! », argues Chantal Lamoureux, rightly.
Having a financial plan written by a professional also leads to “better financial resilience”, according to a study published in July5, an increased ability to deal with unforeseen events such as a sudden increase in interest rates, a disabling illness or the loss of a spouse. For what ? Thanks to the famous emergency fund, very often. This is true across all income brackets, but much more so among the less fortunate. However, they are the ones who have the least access to experts.
A glimmer of hope here: a new charity dedicated to this cause was born last summer. The Canadian Financial Planning Foundation hopes to connect volunteer experts with people who can’t afford to hire them. Other voices are calling for financial services to qualify for a tax credit.
We do indeed need original and unique ideas to democratize services that affect our finances as we have done, to a certain extent, for legal services.