Some DIY investors are motivated by learning about finance and taking responsibility for their financial successes and failures.izusek/iStockPhoto / Getty Images
It’s not just about the fees anymore.
As the number of do-it-yourself investors grows, research has often attributed the impulse to go it alone (rather than working with a professional) to a combination of advisor fees, lack of trust and access to products, and skepticism about performance.
But a study released this month from the Canadian Investment Regulatory Organization (CIRO) highlights a different motivation: identity.
Innovative Research Group conducted in-depth interviews for CIRO with 40 DIY investors. It found these investors are motivated by learning about finance and taking responsibility for their financial successes and failures, as well as connecting with friends and family about investing.
Alexandra Williams, CIRO’s senior vice-president of strategy, innovation and stakeholder protection, said in a release accompanying the study that investing gives some people a sense of confidence, satisfaction and control.
“Being an investor is an identity in and of itself,” she said.
So, what does that mean for those offering professional advice? At a time when CIRO is considering allowing online brokerages to provide non-tailored advice to DIY investors, the question of how advisors cater to the 45 per cent of Canadians who invest on their own is important.
If clients are comfortable with – or even empowered by – managing their investments, advisors might do better to cede that ground and focus their energy and expertise elsewhere.
Aravind Sithamparapillai, financial planner at Ironwood Wealth Management Group in Fonthill, Ont., said in an article this week about CIRO’s consultation that he believes a contingent of DIY investors will still seek out advisors for advice on their broader financial picture, even if they choose to maintain control of most or all of their investments.
A survey released this week from Edward Jones and Cerulli Associates reinforced this point, finding that financial planning is a growing component of advisor practices. It also found that, far from an advisor’s ability to pick stocks and generate returns, soft skills such as trustworthiness, accountability, and responsiveness to clients’ needs were the most valued part of the relationship.
The survey also compared the confidence of DIY and advised clients on specific goals, and found that the gap was widest (i.e., investors with advisors were much more confident) in complex areas, such as charitable giving and philanthropy, starting a business, and estate planning.
The focus on client-specific planning is even more important as the threat of tariffs resurfaces in a material way. Barbara Balfour reported this week on how advisors in three vulnerable sectors – oil and gas, agriculture and automotive – are adjusting financial plans to help clients weather the storm.
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No disputing: When Kate, a 71-year-old retiree living in Guelph, Ont., opened her tax-free savings account in 2009, she wanted to buy stocks and maximize her returns – as long as it didn’t mean going on an emotional roller-coaster ride or sacrificing too much leisure time. She found her solution in the “blazingly simple” Canadian Essentials Portfolio, and her TFSA is now worth $247,000 as of mid-June.