Canadians love their advisors–but Gen Z and Millenials are shaking things up

Pierre Daillie: [00:00:00] This is the Insight is Capital podcast.

Announcement: The views and opinions expressed in this broadcast are those of the individual guests and do not necessarily reflect the official policy or position of advisoranalyst. com or of our guests. This broadcast is meant to be for informational purposes only. Nothing discussed in this broadcast is intended to be considered as advice.

Pierre Daillie: Welcome back to Insider’s Capital. I’m Pierre Daillie, and in today’s episode, we’ll be diving into the findings of Vanguard Canada’s latest value of advice survey with Mario Cianfarani, Head of Sales and Distribution at Vanguard Investments Canada. This survey took a close look at the evolving landscape of financial advice in Canada, highlighting some key trends.

While advisors still enjoy strong client satisfaction, with 74 percent of Canadian investors feeling their advisor is worth every dollar, a new generation is shifting towards online brokerages. In fact, 40 percent of investors aged 18 to 34 now manage their assets online, [00:01:00] compared to just 17 percent of those over 55.

Mario joins us to explore these shifts and what they mean for the future of financial advice in Canada.

Mario Cianfarani, Head of Distribution at Vanguard Investments Canada is here. Mario, it’s great to have you on again and catch up with you. Pierre,

Mario Cianfarani: this is great. You know, our first conversation was a lot of fun. Uh, looking forward to this one as well. I, I think we have, uh, um, some value add that we can share with your listeners.

So, uh, looking forward to this conversation.

Pierre Daillie: Likewise, Mario, I’ve been looking forward to this as well. So today we’re, we’re going to dive into Vanguard’s online portfolio. Latest in depth advisor sentiment survey on the value of advice, which surveyed 1307 Canadian investors. And some of the findings might surprise you.

It’s interesting because frankly, in the last five years, we’ve seen some pretty hairy and pivotal moments in markets, moments that really tested the whole advisor [00:02:00] client relationship, right? I mean, we got COVID. Yeah, we had high speed drawdowns like March, 2020, we had 2022 where both bonds and stocks were down, uh, inflation, a huge increase in interest rates.

Um, lots of, uh, lots of tests for that relationship for the advisor client relationship. So Mario, what did you find out from this survey? What do Canadian investors think of their advisors?

Mario Cianfarani: Yeah, Pierre, I think you’ve touched on a number of different, um, market events, generational, in some cases, you and I are of a certain vintage where we’ve seen some of these market events in terms of play out over the course of our career.

But, uh, I think those, those events have certainly brought advice to the, to the forefront. Um, what we found in our survey was, um, that Canadians are generally happy with advice, um, and they want more of it. Uh, so through some, through some of the, uh, [00:03:00] through some of the questions that we asked, um, you know, Canadians generally see the value of the advice being very, very high and in terms of very happy with, with what they’re getting, very happy with the paying for the service.

And so, you know, in terms of one of the, one of the respondents was, you know, do you see value in, in advice? 44 percent of our respondents across sort of the, the, the, the sample size said yes. Um, very high in terms of the value, um, 45 percent said they see value. So, you know, when you, when you combine those two, almost 90 percent of our respondents said, Hey, we see the value of this advice.

And so that’s really awesome as an industry, you know, what, what, What other industry can you point to that gets, you know, a satisfaction rating across, you know, that large a cohort in terms of the numbers and, and seeing that, that value now, having said that, as we drill down across, you know, that sample size and, [00:04:00] and our survey, um, sampled Canadian investors from, you know, Vancouver to St.

John’s and, uh, you know, across, you know, Regions across demographics, gender as well. When we double click through some of the data points, you know, there is there is an opportunity here for for advisors within certain courts. When we look at, um, from a demographic perspective, older, um, investors are, you know, much happier with the level of advice that they’re getting.

You know, there is an opportunity there with the with the younger generation, you know, in terms of their, um, You know, their, their trust of advice, their, their use of advice. Um, and so we think that, you know, apart from, you know, the terms of how we look at those two demographics, I think there’s a real opportunity for advisers to engage with that younger group because I’m not sure that they’re.

You know, a long enough in their journey through their, their savings and investing to understand what [00:05:00] the value of that is, you know, certainly the parents do because they’ve gone through enough life events that hopefully their advisor has been there walking with them and helping them through, um, you know, both, both challenging times and, you know, great times, you know, the birth of kids and, you know, uh, savings and that sort of thing.

So it really is sort of the tale of two investors. When, when we double click through, uh, through the survey results.

Pierre Daillie: So what were some of the differences in the results, like in the, uh, you know, like in the 55 plus category versus the 18 to 34 category?

Mario Cianfarani: Yeah. Just in terms of, um, I think, uh, with respect to trust, there was a, there’s a bit of a trust issue with the younger generation, certainly being the over 55, I think had much more trust with, with their advisor and the, the, the, the The services that they were getting.

And so we saw that through, and certainly as we talked to advisors, that younger generation just hasn’t had the opportunity [00:06:00] to engage with that advisor through, you know, through a longer period of time. And so there was a trust issue. There was, um, you know, younger investor said, Hey, you know, I, I want to do it myself, however, you know, I don’t have the, the, the time, the resources and the ability to do this.

And so it’s almost. Uh, you know, it was interesting to hear, right. There, there’s a trust issue, uh, initially, but it’s also this, they’re also saying we kind of, we do need help. We, you know, we, we, we’d love to do it on our own, but you know, where do I get this information? The other part, one, one interesting.

Pierre Daillie: And Mario, it was a very, I mean, I think without, I don’t want to gloss over it because looking at the survey, you know, the structure of the survey, it was very granular. Yeah. Yeah. It wasn’t, it wasn’t a yes or no, maybe, you know, I think so it was, I mean, there was like, you know, there was like, you know, sometimes 10, 10 different responses that you could choose from that gave, you know, a grade, a very granular [00:07:00] grade to each respondent.

Of course. And

Mario Cianfarani: we tried to be really specific again, through our work with advisors. And understanding some of the challenges within the industry and some of the challenges that they face in, you know, building their practice and maintaining their practice, what we wanted to do is hear from investors themselves, right?

And so certainly we have a large sample of advice that we hear that we talked to on a, on a daily basis, on a yearly basis that we, you know, are looking at, but we ran a similar study in the U S across, you know, a much larger sample size. And for us, it was, Hey, do Canadian investors feel similarly to that?

To, to our U S uh, you know, our U S cousins down South. And, you know, interestingly enough, they do. And so some of the, some of the, um, responses were very consistent in terms of the perception of the value of advice from. Um, from investors themselves. So when we put it together with some of the work we’ve been doing over the last 25 years with [00:08:00] advisors, alpha, I think we, you know, I think your audience would be well familiar with that.

You know, the advisors, alpha research was our, you know, sort of unpacking what the advisor does and trying to figure out where the alpha is from the advice from the advisor themselves, these studies are really taking it, you know, flipping that up. Flipping that on its end and say, Hey, investors, where do you think the value is that your advisors is, is, is, you know, where, where, where do you think that they’re bringing the, the, the value and what do you think that that value is?

And where would you like to see more of it? And so when you package those two pieces of information together, it’s a really powerful story from the advice side to the investor side. And, you know, obviously we love sharing it with, with advisors and, and, um, you know, and with investors themselves, because I think that it’s really powerful.

Pierre Daillie: Yeah. I mean, it sounds like there’s a lot of triangulation in there. That’s really, you know, that’s really interesting, Mario, especially the, [00:09:00] the findings about younger investors, since younger investors are going to increasingly represent a larger and larger share. Of the future of wealth management. And they might, you know, without realizing it, because you don’t know what you don’t know about, you know, they might actually end up missing out on the value of that advisor alpha, right?

Mario Cianfarani: Correct. Correct. And this is where I, again, I think that the younger generation is. Um, you know, newer in their journey, uh, you know, they’re, we’ve seen a number of you, you pointed, you alluded to it earlier in your introduction in terms of some of the volatility in the market, chasing returns, thinking that advice is just about the investment side of it.

Right. And when, when in actual fact, it’s, you know, the advice is the advice and the performance, the investment performance, Is a small part of what the advisor does. And there’s much more significant parts of that full ecosystem where the advisor adds even more value. [00:10:00] The advice part is sort of table stakes now, right?

We have a lot of, a lot of technology and tools for them to, you know, build portfolios. So,

Pierre Daillie: you know, when you’re younger, you know, you, you know, for an advisor communicating to that cohort, you know, like typically, you know, we try to uncut, you know, as advisors, we try to uncover needs. Yep. And then, and then speak to those needs.

But, but when, you know, we were speaking to 18 to 34, uh, you know, people, a cohort, you know, people who are 18 to 34, young people, they, They may not necessarily know they have a need that they don’t know about, you know, like, it’s like an unknown, unknown, like where, where, you know, they scratch their head and they say things to themselves, like, you know, or to their friends, you know, I didn’t even know that existed, or I didn’t even know I could do that, or that was possible.

And so. You know, that’s where, you know, advisors can, can begin to really sort of capture the interest of, of the 18 to 34, uh, cohort. [00:11:00] Uh, I don’t mean to answer the, you know, my, my question to you that I’m about to ask you, but so how can, how can advisors, how can financial advisors attract and retain younger investors who are increasingly, opposingly turning to online platforms for investment management, like, uh, How do you, how do you begin to demonstrate your undeniable value?

Mario Cianfarani: Yeah, Pierre, I think you’ve, you’ve, you’ve touched on it, right? It’s, you know, in our interactions with the head offices and with individual advisors, the head offices recognize and they’re sort of aggregating that data across their advice, um, network. And often it’s, help us, Help us help our advisors tell the story.

And I think part of that is the communication that, you know, I think there’s been historically they they’ve led with the investment side and the performance and Hey, come to me because I can build you a portfolio that’s going to return, you know, 20 percent a year as, as an example, um, But really it’s, it’s not necessarily the performance base.

And so it’s, it’s really helping them tell the [00:12:00] story that, no, no, there’s other things that we’re going to do. Or oftentimes the advisor is the first call when there’s a life event, right? Unfortunately, when, when parents pass or, you know, and the states have to get settled, it’s, it’s the advisor that you’re going to call.

And you have, you know, the birth of your first child, you know, RESPs and that sort of thing. And so the advisor is really. You know, that life coach through those life events, both positive and, you know, sometimes challenging that can help them and hold their hand through, you know, helping them navigate and plan for the future.

It’s also about the events in the headlines, right? That, you know, meme stocks, you know, help me understand what’s happening here with, with whether it’s crypto or what, what have you, you know, I think that advisor is that trusted source of information. So. For us, it’s, you know, really leaning into, um, the advice network and helping them tell the story of their value apart from the investment side.

And so how do they, how do advisors really engage? I think, you know, number one is look at your existing book of [00:13:00] business, book of business, excuse me. It’s there, right? Like, I think, you know, historically advisors have, have leaned on one or two members of the family. But try to engage with the kids, try to, you know, bring them in, obviously with parental consent and, you know, with their approval, but that’s a really powerful way of building that relationship because trust isn’t built with, you know, one conversation, one, you know, sort of engagement.

It’s built over time. And I think with that younger generation, that the great thing is. Advisors have the time to build those relationships with them and demonstrate value through time. And so I think that’s part of, you know, that’s the first thing to do is look at your book of business, see where you’re maybe leaning on one side of the family versus bringing in the entire family.

If there’s opportunities, certainly engage with that.

Pierre Daillie: Well, like, like, like for, like, for example, Mario, like one of the big dilemmas, I mean, for Canadians, especially if you’re in a, any of the major urban [00:14:00] centers is the, the cost of buying a home and, and, you know, like a lot of the conversation around dinner tables is, you know, I don’t know how you’re going to do it, or I don’t know how we’re going to do this.

Like, you know, we’re probably going to have to mark, you know, get a second mortgage to get a debt, you know, either that, or, you know, but, you know, You know, it’s not, I think there’s also the question of agency and, you know, younger folks don’t want to, younger investors don’t want to, you know, say to their mom and dad, you know, uh, how am I ever going to buy a house if you don’t help me and, and, you know, have it be some sort of, not an ultimatum, but it seems to be becoming a fait accompli.

Right. I mean, like where, where, you know, like a starter home is 1. 2 million, right. So where do you come up with. You know, a quarter of a million dollars for a down payment or 300, 000 for a down payment. Yeah. And so, so maybe, maybe, maybe one of those ways into that conversation is, um, you know, Hey, this is, this [00:15:00] seems to be a, a consistent dilemma across households.

Um, you know, have you thought about all the ways that you could maximize all of your savings using all the different means and tools and account types? Yep. You know, to, to, to get the most juice out of your savings dollars to get there faster. And, you know, and I, I mean, there was that whole fire thing happening, you know, during COVID where, you know, you know, young, you know, younger, young adults are, are talking about, oh, I’m going to, I’m going to retire before you.

And

Mario Cianfarani: you, and you, and I know how that story plays out and, and, and it has. And what’s interesting in the data is when we looked at and we asked the, you know, the over 55, you know, how, you know, how willing are you to, you know, sort of expedite the transfer of wealth. And, you know, what’s interesting is parents do want to give.

Yeah, earlier, but what’s also interesting and it’s, again, [00:16:00] it’s this, it’s, it’s this dichotomy of, of, of respondents, but they’re worried that they may not have enough for themselves to retirement. And so, you know, they’re, they’re trying to balance, you know, helping the kids out, also looking at their financial future and their financial health and saying, but I think I need a little bit more because of, you know, some of the things you’ve talked about.

Inflation, you know, whether it’s food, inflation, housing, inflation, um, things cost more and retirement will cost more. And so, you know, there, there is this push and pull between what they want to do and what they’re able to do. And that’s interesting. And we think that, again, to your point, I think there’s a real opportunity for an advisor to sit there and build that plan.

Because again, going back to the data. Those who had a plan felt, you know, significantly more confident about their financial future versus those who didn’t have a plan. So again, there’s, there’s that opportunity set for advisors to sit there and build that plan and longer term, [00:17:00] um, view. And make it again, it’s the being able to sleep at night part of it.

Right. And that’s what the, that’s what the advisor can add really a lot of value there.

Pierre Daillie: I also wanted to add, you know, like I brought up this fire thing, but, you know, like, I remember feeling like when I heard about this fire thing as a former advisor, I remember thinking, you know, Oh, that’s ridiculous.

Come on. You know, like, like that’s unreasonable. That’s an unreasonable plan, but, but instead of, instead of shooting it down, why not look at it? Yeah. You know, and, and, and unpack it and say, okay, what are the, what are the things that really got younger investors hooked about it? Like what, what elements of that are so attractive emotionally, right?

Where, where, you know, this is a real. Thing. This is a real dilemma. Yeah. Like, I don’t know how I’m going to get there. I don’t know how we’re going to get our kids there. I don’t know how we’re going to launch our kids into the world and help them, you know, start their own base of wealth and then eventually, you know, and then, and then another thing that, you know, I keep seeing these videos on [00:18:00] Instagram, which, you know, we’re about how, you know, and it’s, it’s a younger person in the video saying, you know, Don’t give me the house, you know, put it in an irrevocable trust, because I don’t want to pay the capital gains tax bill on your house.

You know, if you put it into a trust, I’ll get the whole house and I won’t have to pay any taxes. So, you know, younger people, it’s almost like, you know, these, these proxies for communication from that generation to our, our generation is saying, you know, there’s smarter ways to do things, mom and dad, you know, like, I mean, and so if you’re the advisor that comes along and.

Unpacks that for the family and unpacks it for the 18 to 34, uh, crowd. Um, you know, suddenly, you know, maybe you’re a step closer to building that, that trust. Here’s how you actually can do it. Of course, you know, here’s how you can actually begin to do that and have it be, you know, in a way realistic.

Right? Yeah, I,

Mario Cianfarani: I agree. I’d love to share a story with, um, I, I’m [00:19:00] part of a cycling group, uh, that Okay, that cycles from Midtown Toronto in the mornings. Uh, I’m one of those 5:00 AM guys. And, uh, uh, one morning I got paired with an advisor who. You know, had a, you know, had a client, modest account, um, father passed away, loved, you know, the father who everyone loved passed away and got the call, Hey, can you help me with the estate?

And thinking, you know, modest estate, him and his sister were, you know, not expecting much. So the advisor put them in touch with an estate lawyer, a tax lawyer to help them settle because anyone who’s gone through that process understands that it is very nuanced. It is very. In some cases, complicated, it’s very dependent on the personal situations of that person.

And so helping through that initial process, a few months later, gets another shock call from the client and says, you’re not going to believe this, this modest estate that we thought we were getting ended up being enormous. It was a, it was an eight figure estate. Wow. And so, you know, this sadness from the passing of their beloved father to, you know, now this, this, this.

[00:20:00] Huge estate, wouldn’t you get, you know, there was elation, right. Suddenly you’re getting all this money, but then, you know, as they thought about it and unpacked it, there was resentment buildup, you know, why didn’t dad talk to us about this? And so advisors now sitting with them, helping them to settle this estate that was much more complicated than they initially thought and having to deal with the emotions, right.

And having to walk through the client and his sister through this idea of why didn’t dad. And so. The advisor, you know, I think really smartly put them in touch with a family therapist. And so the, you know, the brother and sister worked through their feelings, brought the family in. And so now you’re, he’s building out that holistic plan.

And for the advisor, it was serving the client and he, he inherited the estate, uh, from both his client and his sister signed up the kids on one side and the other. Yeah. The winging of that business. Had nothing to do. With investment return [00:21:00] and performance. And isn’t that amazing? You serve the client and builds and builds out, you know, helps them through this, these two monumental life events.

And I think that encapsulates, you know, what we’ve been talking about today, right? It’s not about the, the investment returns and I, and I would bet, and I would hazard a guess if you ask the kids across both his client and, you know, his new client. What they thought about their advisor, I think they would have a very different view than sort of the survey results because they had a couple of really big life events within a short period of time where this advisor stepped in and did the right things and put them in touch with the subject matter experts that could help them navigate, you know, what can be a very complicated process.

And I, I love that story. Um, and you know, and to your point, it’s how do we do this now? And so this client now. You know, is able to transfer some wealth, his kids will live debt free, his retirement has been completely transformed. What a great story and what a great way to add value to, you know, to families [00:22:00] and build, you know, that client network.

And I think, you know, you touched on it. It is, it can be complicated and, and you have the subject matter expertise to walk people through it.

Pierre Daillie: Absolutely. I mean, estates are, they can be harrowing, uh, emotionally and, and that, that emotional distraction can actually cause behavioral mistakes, big ones. And, you know, and that’s, that’s a big part of, you know, being an advisor today is, is, you know, the behavioral aspects, they’re not just about, you know, when to get in and out of the market, they’re about, you know, what state of mind are you in when you’re making key financial decisions, key legal decisions, key decisions, period.

That’s very interesting. And you’re not going to get that from, you’re not going to get that from a robo advisor.

Mario Cianfarani: It’s interesting because, because one of my, one of my, as we were writing up and he was much more fit than I am, um, you know, one of my comments and it was, you know, try to navigate that situation now, admittedly very different and very complex through an online [00:23:00] survey.

Right. There’s no way that you can sort of deal with the nuance of that situation. You can’t deal with the, the personal emotions through it. But that advisor and, you know, sat down with them, met with them and was able to deal with each of those, each of the conflicting emotions, right. And I think that’s where, you know, again, that’s where the advisor adds a tremendous amount of value.

You know, certainly I’ve heard. Again, examples where people have tried to settle estates and use online resources, and there’s a lot, and it’s great given the amount of information, but it is very challenging and, and there’s questions. There’s no mediate, there’s, there’s no mediator. Correct. And so, you know, that’s where, again.

There’s a place for digital, obviously, and Vanguard is a proponent of that. Um, but there’s, there’s a big part of that, you know, interpersonal connection that, um, that the advisor brings to bear and being able to answer the question in a way that makes sense to the, you know, to, [00:24:00] to, to the clients, to the kids.

Um, so you’re right. It’s, it’s trying to get that information, uh, through, you know, through a digital platform or through, through the web. You know, you’d be, you’d be going down a lot of rabbit holes.

Pierre Daillie: What steps can advisors take to, to build and establish stronger relationships with this demographic? I think we’ve, we’ve touched on, on that, but are there any, um, sort of general headings or, or, uh, that we haven’t touched?

Mario Cianfarani: Yeah, I think, I think we have to meet them where they are, right? It’s, it’s a generation that’s very comfortable. engaging digitally. Um, and so I think it’s not just the advisor’s responsibility. I think this is a message for the head offices as well, putting tools in place where the advisors can efficiently engage with these, with this generation.

And so, you know, this is a message to, you know, the advice network in terms of making sure that there’s digital tools and online tools that can help them get to that point. And so marrying the interpersonal side, you and I [00:25:00] speaking on the phone or via VIT, via. Via video or in person with, you know, a digital component.

Absolutely. I think, you know, automate what, what can be automated will be automated. And I think, again, this, this is the generation that wants simplicity, efficiency. And so anything that can be automated, whether it’s account opening or statements or, you know, the simple administrative stuff, again, this is more a message for the head offices should, and they’ve done a really, really great job.

It’s making sure that they’re maintaining a critical eye towards that. But again, through the survey, you know, when we asked this generation, you know, what’s important to you, you know, it was things like. Get to know me, you know, learn about me, um, make me feel like you’re working for my best interest. You know, that’s pretty, pretty powerful.

Um, take good care of me. Um, you know, make sure that I understand the financial plan. Again, there’s a, a really great way and technology is [00:26:00] there that we can help automate a big portion of that plan and absolutely advisors should use it. And they are use more of it. But when you get that, that, that output, sit down with the client, ask them and really sit down with them and make sure that they understand what they’re doing and why, you know, again, it’s, it’s, it’s a generation that wants to know the why and what’s in it for me and what’s the payoff.

And so I think there’s a real opportunity there. And again, it’s, you know, while, you know, the 18 18 year olds might not necessarily be thinking about retirement. But as, as you get to that, you know, 30, 35, 40, obviously they start building out a retirement, start talking about it. Right. They may not necessarily bite in the first few years, but understanding that the earlier you start, the better you are.

And, and having that information and explaining, you know, some of the most powerful. Pieces of simple data that I remember as, as a 21, 22 year old is, you know, that investing a thousand dollars way back when, um, and then compounding that was [00:27:00] really, really powerful and like, well, okay, great. I, I should be doing this and I can, and I could afford to do a thousand dollars even at 18 when, you know, or 19 when I, when I, when I was working.

But I think it’s those, I, it’s those specific messages to that cohort, um, and taking that time. And so for the advisors, you know, obviously with people like Books of businesses are a little bit smaller, you know, maybe having the resources are a little bit challenged. And so it, it falls on to, it falls onto that main advisor to do that.

But for larger books of business, you know, think about your practice, think about who, who you’re bringing on and, you know, make sure that it’s, that your practice includes. You know, younger, younger associates, women as well, to be able to have that message and, you know, again, having trust as the advisor that you’re running, you know, you’re running a small business, you’re running, you know, in some cases, small corporation, you know, make sure that you’re overseeing that and putting people in positions to succeed and leverage their strengths, especially with that younger group.

So I think there’s opportunities there to [00:28:00] build that trust. It doesn’t happen overnight, but I think if you start, you know, the best time to was. Last year, the second best time is today, right? And I think, I think if you could start sooner, I think your business is just put in a, in a better position to succeed.

Pierre Daillie: Yeah. Excellent. And, and, um, Mario, you highlight the importance of frequent communication and client satisfaction. What specific communication strategies can advisors implement to enhance? Their engagement and foster, you know, this sense of optimism about, uh, the financial future of, you know, uh, younger, that younger cohort’s financial future.

Like I, it’s funny, I was, as I was driving along the other day and thinking about, you know, this upcoming, uh, our, our conversation and, and, you know, I was thinking, you know, like there’s so many ways to make yourself accessible as an advisor that you haven’t necessarily done with your, you know, You’re more senior, you know, well heeled, uh, you know, 55 plus, um, [00:29:00] clients.

But with the younger set, with the 18 to 34, you know, they’re more adept to using their phones and being on their phones and, you know, texting and, uh, you know, WhatsApp and, uh, all the different, you know, different, different platforms that, that you can use to stay in touch with, with people. But you can also have your own social network.

You know, you can even, you can establish your own communications network with your clients, um, or open channels where, where clients can, you know, that You know, the client who prefers that, that media, that form of communication can be in touch with you. Um, And it’s not that you’re going to be instantly available, but just that you respond within a certain amount of time.

When they don’t call you, but they text you. Agreed. Agreed. Yeah. Right. I mean, so, so what are, what are some of the, in your, in your, in the research, what are some of the findings that, that you, that you made in terms of establishing frequent communication or open lines? I think you’ve touched on it and we’ve

Mario Cianfarani: touched on it a little bit in [00:30:00] this conversation.

Meet them where they are, right? Right. It’s, it can be a little bit overwhelming in terms of, um, the, the proliferation of means of communication, right? Whether it’s social media, whether it’s WhatsApp texting, Phone, video, um, Twitter, Instagram, like all of it. I mean, you have to, I think in this day and age, being open minded and receptive to the possibility, obviously, compliance dependent, and that’s, that’s a big portion of it, um, but the, the main message here is, More is, more is preferred over less.

Right. And so through the data, um, our client said about 25 percent of, of the respondents that, that their advisor talks to them once a year and for those, and so we then asked that the next question, how do you, for those who, whose advisors communicated more frequently about once a month, how do you feel about your future?

And about half of them felt confident about their financial future, whereas those who were contacted once a year, [00:31:00] about 10 percent felt confident about their financial future. Wow. Again, that’s very stark in terms of maybe it’s not once a month, but more often as often as feasible as possible. Again, understanding that advisors are under, um, you know, tremendous pressure in terms of time and constraints, but to the extent that you can contact and touch your clients.

Um, and communicate them. Communicate with them more, they’re going to feel better about what it is, you know, about that client, about the service that they’re getting. And that’s, again, it’s the being able to sleep at night. And so, you know, the main message that came out of that part of the survey was, you know, talk to your clients as much as you can and sort of, you know, reach out to them.

And so to the extent you can, because they may not necessarily in the moment say, Hey, I appreciate it. But over time, again, it’s building that trust, building that relationship. They end up becoming the advisor, the first call when those life events happen. And that’s, you know, really that, that, I think that says it all, right.

I think that when the advisor [00:32:00] becomes that first call, you know, you’ve done your job and that’s where you start to add real value. But I think it’s, you know, talking to your clients, contacting more, you know, making sure that they’re there, that you’re kind of that. You know, overseeing hand, um, whenever anything is happening, either from a macro perspective or from a personal perspective.

Pierre Daillie: I can see like, you know, having, uh, you know, offering direct access, you know, through all the different, you know, various means that you can do that with.

Um, would be enticing, like, uh, you know, it’s two in the morning and, you know, you have a question for your advisor. It’s not that you’re going to, you know, expect them to return the, you know, respond to a, you know, a text message or an email at two in the morning, but, but you can put it out there and. And then wait for the appropriate time to hear back from them.

Right. I mean, I, I think for, for, you know, uh, any client that’s, that’s an enticing offering is direct [00:33:00] direct access to the advisor or the

Mario Cianfarani: team. Right. I think, I think you’ve touched on it, right? I think the team is there to support the advisor. It doesn’t have to be the advisor at 2 a. m. Hopefully it’s not the associate at 2 a.

m. as well. Um, but the team is there, right?

Pierre Daillie: But when you’re worried, you know, for a client, when, you know, you don’t know when a client is going to have a pang of anxiety about something, you know, they just watched the news, like the 24 hour news cycle, you know, and then, and then, and then have a reaction to that and say, I’m going to, I’m going to ask my advisor to, you know, give me an opinion on this.

Like, what do you think about this? Is this something to worry about? And, and then. You know, there, nothing’s lost, but you know, in the days when it was just phone calls and you were trying to reach your advisor and you couldn’t, it could get very frustrating very quickly. I like, I, you know, I like your, your, you know, one of the finding of your research was that, you know, the amount of communication was diametrically opposed to that feeling of confidence.

Yep. Right. The less communication, [00:34:00] the far greater that feeling of, of, you know, insecurity. Of course. About things, uh, you know, it’s an order of magnitude, right?

Mario Cianfarani: It was, it was so stark and, and we saw that in, in the U. S. survey as well. And we thought, you know, again, when we look at our U. S. brothers and sisters down South, you know, does it translate?

You know, interestingly enough, investors are investors regardless sometimes of geography. And Canadians had. Almost the exact same thing. And so isn’t that great as we study, you know, advice across the world. And I think Vanguard has a unique perspective to make sure that we can bring those insights. It, it crosses geographies.

And so what Canadians often care about is the same thing that Australians care about, or, you know, someone in the UK, um, And that insight is really powerful for us as we put that in, you know, we put that, uh, package, all those, those insights across, uh, across the world for advisors here in Canada, but you’re right.

I think it’s, you know, as we get better from a technological perspective, think about AI as a, as enabling [00:35:00] tool, right? Everyone’s worried about AI, but how about AI as an enabler, right? You know, some of those simple questions, you know, Hey, Pierre, should I be worried about this, this stock going up 200%?

Should, should we get in? And maybe there’s, you know, there’s a standard. You know, Hey, Hey, Mario, you know, this doesn’t fit in with your financial plan, you know, and that, you know, and that happens at 11 o’clock at night, because oftentimes, you know, we’re coming home late, we have the evening news and we see the chart, but then that, you know, that comes out to the advisors.

A Mario, um, asked you this question. Do you want to follow up with, with him? And so again, there’s so many really powerful tools that are being developed, um, that an advisor can utilize. It’s, it’s, it can be, you You know, sometimes, uh, overwhelming, but I think this is where the head office is in terms of building out those programs and helping advisors, coaching, educating, um, then, you know, there’s a real opportunity for them as well.

They’re, they’re doing it. I think they need to do, uh, do it more because obviously, uh, the pace of change isn’t going to slow. It’s, [00:36:00] it’s only going to speed up.

Pierre Daillie: Yeah, that’s very interesting. Um, Mario, the study indicates that. Uh, many younger investors lack the time, knowledge, or confidence to manage their investments effectively.

How, how can advisors effectively demonstrate their value to this group and showcase the benefits of professional guidance? I, you know, I think there’s this. This, you know, problem that, that exists, which is that, you know, the assumption that, uh, a robo advisor can save you all that time and energy and thought energy.

Um, but it can’t possibly provide you with a, you know, a personalized view on things. Yeah. I feel like this is almost like the, the low hanging fruit. It’s the, the most obvious part of the equation, which is talking about investing you. Itself and returns and expectations and, and, and, you know, investment planning.

And, and [00:37:00] while there’s all these other areas around the advisor, where, where there’s real value being added, um, you know, maybe, maybe younger investors feel overconfident about, you know, what they’re doing. The options that exist for them without having to engage with an advisor. Is that, is that maybe part of the problem?

I think

Mario Cianfarani: so. What was interesting also, um, and as well, um, we asked where, where would you want to get your financial advice? You know, is it online? Uh, and overwhelming across demographics, across gender. Um, it was from a financial services professional. So isn’t it interesting again, that we have this cohort and specifically around, you know, that younger generation that says, okay, well, I, I, you know, I, You need to have a little bit of trust, you know, about advice.

I want to do it online. I am doing it online, but I want my financial advice from a financial services professional. And I think that’s, that’s the answer, right? I think you’ve touched [00:38:00] on it. It’s, there’s a lot of sources for financial information. I need someone to curate that information for me. I need it to be personalized.

I need it specific to me and not have me become Dr. Google. Um, as my wife was a nurse and has told me never to, to Google that because I’ve gotten myself into trouble there. Um, but you need that, but that’s where the financial service professional say, you know, you, you look at me and say, Mario, that, that, that you don’t really need to think about that right now with where you are here.

Let me point you to some resources that you can use online. Right. And so again, you curate that information for them specifically. Um, but again, it’s, it’s about demonstrating that value, adding that value, because I think there is a need and they, they’ve said that they want it. And they said that they want this information from someone who knows and an expert, because again, you can proliferate across social media platforms and one person may say one thing and someone may say the exact opposite.

So now what am I supposed to do? But again, having someone in the background to say, no, no, here, here’s what you should care about. Here’s why this person said this, and this other person said that, but let me tell you how it fits your specific plan and why you should care about this part of it. [00:39:00] So again, it’s all about communicating.

I think it’s about telling that story. It’s, you know, let’s, the portfolio value is one thing, and that’s historically been where I think the entire industry’s led, but it’s about the financial. It’s not just about the. Portfolio performance. It’s about the value of that financial advice, the financial plan, the long term.

But then it’s also that emotional side. And so even through our advisors, alpha research, you know, those are the three real big buckets, um, of, of, of alpha that advisors generate. And it’s the last two, it’s the financial plan and the emotional value where they add the most amount of value, um, because that the portfolio.

You and I both know that, again, the power of technology, you can automate that. And, you know, we can certainly buy model portfolios and single ticket solutions, um, and ETFs and the, the, the level of choice and the amount of choice I think is great. It’s again, it can be overwhelming, but that’s where an advisor comes in to say, look, this is where, this is where I think [00:40:00] these products make the most amount of sense for you.

And so, again, it’s, it’s, it’s those other two buckets where, um, the advisor should focus and make sure that they’re telling the

Pierre Daillie: story. Right. And, and, and Mario, is there also a perception among younger investors that having a financial advisor is expensive, first of all, that it’s an expensive proposition?

Like it’s, you know, and, and, and secondly, and it’s a compound question, is the onboarding process. Like, yeah. Now I’m going to go see this financial advisor and he’s going to ask me a ton of personal questions because I want personalized advice, but then in order to get that personalized advice, I have to tell them my life story or my goals or my plans, you know, and, and so I think, I think for, uh, you know, among the, you know, younger, uh, the younger of the 18 to 34, that might not be, you know, You know, that might not feel like an attractive thing to do.

It’s like, Oh, I got to go open up. I got to go, you know, they’re going to ask me all, you know, my advisors is going to, my potential [00:41:00] advisor is going to ask me all these questions. And, you know, I’m going to have to talk. Yeah, exactly. I’m going to have to, and it’s going to cost. And, and so are those potential barriers that.

Are those the kind of, how would you describe the opportunity to, you know, help reduce those barriers to entry for that younger investor?

Mario Cianfarani: Yeah, I think this is a head office and I think they’re doing a really great job of enabling technology, digital onboarding, digital opening accounts, e signing, DocuSign, that sort of thing, um, to make it seem as seamless as possible.

And so. Where technology can be used, it should be used. What can be automated will be automated. Um, you know, if there was, um, you know, some, some challenges through, through the pandemic, if, if there were positives that came out of it for, for our industry was that it did force the industry into these, you know, digital enablement, right.

It, right. Into this ability to open up an account digitally, as opposed to sitting down and [00:42:00] having them sign. And I think that was, you know, a monumental shift forward. And I think for that specific cohort, of course, they just want to go on their email and they, you know, they want to sign it and be done with it.

And so I think it’s, it’s incumbent on dealerships to make sure that their advisors have the tools to be able to be as efficient with that group of, you know, that group of investors as possible. It’s also about making sure that the advisors are as, as efficient as possible. Trained and well educated on the value of those, those services.

Because again, there’s, there’s a lot of tools that are being, you know, pushed down from the top of the house. I think they, they need to make sure that they’re feeling advisors are feeling and their teams are feeling supported in terms of what the value add is. Um, and so I think it’s, it’s meeting them where they are.

Honestly, you’re still going to get people maybe like myself who like to sign a piece of paper every once in a while, um, but we’re, we’re coming up to speed, but I Enabling technology and using it where, where it’s feasible, where, [00:43:00] where they need to, because again, it saves a lot of time in terms of your, your first question in terms of the value advice.

What’s interesting is, um, when we asked investors what they thought An advisor would, would what, what the advisor’s alpha was. So if you remember our study and advisors alpha, we kind of quantified it at roughly about 3%, not necessarily the point in time, but over time, the advisor at adds about 3 percent to the portfolio’s return through a number of different, um, things that they do specifically around behavioral coaching, the emotional, um, you know, the emotional support.

But when you ask the investor, Hey, investor, what’s your What do you think the advisor’s alpha is? And that number came in at 5%. So isn’t that interesting where the investor actually thinks. You know, from their perception, whether true or not, but it’s their perception that the advisors are adding more value than we thought from the advisor side.

And so when we talk about the cost of [00:44:00] advice, I think it’s less about that. And I think they’re, when they’re getting good quality advice, the perception is that they’re adding significantly more value. And again, that’s a really great story to tell and, you know, should be made, you know, more relevant.

Should be made no more broadly to, to investors around the perception and the value. So, you know, it’s, it’s marrying those two. You talked about a little bit of a triangulating what we thought the value advice was and what the investor perceives. And that’s really, really. important.

Pierre Daillie: Mario, this has been a really terrific conversation.

Um, any, uh, any parting thoughts, any parting advice for advisors? I,

Mario Cianfarani: I, I would say huge opportunity for them. I think, you know, there’s some challenges in the data, but I think they’re well positioned. I think technology is finally catching up and, uh, It’s going to be the, the enabler in terms of freeing them up to do the things that they do exceptionally well, which is build those relationships and build trust.

But I think there’s a huge opportunity for them. You know, we talked about, we haven’t even talked about the generational wealth [00:45:00] transfer, but I think there’s a huge opportunity there in terms of being able that, you know, retain assets in the book and also grow and take assets from your competitors who are not necessarily as responsive.

And so I would look at some of the survey results as, um, empowering enabling and again, huge opportunity for, for those who really dig deep and, um, look at the data and use it to, uh, you know, not necessarily transform their business, but help them enable to, to do more and, and, um, reach those investors that they may not necessarily be

Pierre Daillie: focused on right now.

Really great to catch up with you again. Thank you so much for your incredibly valuable time and your insights. Uh, it’s always a pleasure to have you on and talk to you. And for everyone that tuned in, thank you very much for listening. This has been Insight is Capital with Mario Cianferroni. Thank you so much for tuning in.

Thanks to [00:46:00] you.