Groundbreaking Report on Canadian financial services
Advocis, The Financial Advisors Association of Canada, engaged PricewaterhouseCoopers LLP (PwC) to conduct a comprehensive study on the financial advice industry in Canada.
On July 8, 2014, Advocis hosted an exclusive briefing and panel event where executives and researchers from Advocis and PwC highlighted key report findings prior to the public release of the final report.
This is the first national study of its kind and examines the following key areas:
- Challenges and opportunities within the industry
- The impact of recent regulatory reform in other countries, and lessons for Canada
- The value that financial advisors bring to millions of Canadians
- The economic footprint of the small and medium business financial advice industry
This groundbreaking report marks a major milestone in Advocis's efforts to educate policy makers, regulators and the public on the importance of the financial advice sector to Canada's economy.
- Roughly 80,000 small- and medium-sized business (SMB) financial advisors in Canada make up a major portion of the financial advice industry – 80 per cent of all client-facing advisors – and play a unique role in addressing the financial needs of some 12 million Canadian households.
- Moving to a more holistic financial advice model to address both the complexity of products in the market and clients' unique financial needs brings tremendous value to consumers, contributing to an overall wealth effect as Canadians with advisors are substantially better off than those without one.
- Financial advisors are already faced with a complex regulatory framework as regulators contemplate much heavier regulatory requirements. Australia and the UK have experimented with commission-banning and the introduction of a statutory fiduciary standard for advisors, with overall negative results. Future regulatory reform in Canada must be balanced, and must consider how consumers would be impacted by not having sufficient access to financial advice.
- SMB financial advisors are a significant part of the overall finance and insurance industry, representing one-third of total employment in this major sector. Its total direct and indirect economic impact, including spin-off benefits, at 1.4 per cent of total Canadian GDP ($25 billion) and 1.5 per cent of employment (240,000 jobs), exceeds that of the motor vehicle manufacturing, pharmaceuticals and aerospace industries, even when compared only to direct economic impacts (excluding spin-off benefits).
- Going forward, financial advisors that deal effectively with transparency around fees and demonstrate their value for service will continue to enjoy "trusted advisor" status with their clients.