Survey Uncovers How 7% is a Magic Number for Financial Advisors
TORONTO, Feb. 12, 2019 /CNW/ - Investment advisor Adam Hennick of *Hennick Wealth Management is revealing the dark, dark secret of modern advisor investing… most advisors do not beat the market, and many Canadians may be placated with promises of a 7% return…
"Almost everyone who comes to me from another advisor or who I discuss finances with consistently says they are getting a 7% return … and 7% is well known as a safe number in the industry," said Adam Hennick. "It's simply not possible that so many advisors are beating the market at the same magical rate. Also, Canadian investors don't seem to be asking for clear and regular proof of where their investments stand. If you aren't sure what your return is or if you think its 7%, you may want to immediately ask for a review."
Hennick speculates that the psychology of 7% is that it doesn't seem like too much or too little return, so is an easy number to quote and feel comfortable with. "Maybe Canadian investors are too comfortable," added Hennick. "It's your money, you should ask more questions about how much you are earning and be completely comfortable that you fully understand the answer."
In a survey conducted by Hennick Wealth Management interviewing participants from the Angus Reid Forum, Hennick posed questions to Canadians working with financial advisors to uncover the power of the 7% investment suggestion.
Key findings of the survey:
1) Canadian investors are surprisingly happy with a 7% return
Asked how likely they would be to change financial advisors if their rate of return was 7% or less:
- Lending credibility to the 7% theory, 65% said 'not very likely (47%)' or 'not likely at all (18%)'
- A luke-warm 27% said they were 'somewhat likely' to make the change.
- Only 9% of investors said they would be very likely to switch advisors
2) Who's telling Canadians they're getting a 7% return?
- 49% of Canadian investors surveyed say their advisor has told them or shown them their rate of return
- 38% say they check themselves
- 13% say they don't check
3) Canadians should probably check those returns from their advisor more often
- 26% of Canadians are happy to only check returns once a year
- 28% ask for a quarterly update
- 19% ask for an update every six months
- Only 11% of Canadians ask their advisor to show results once a month
4) Most Canadians think they are still keeping up with the neighbours
- 55% believe their investments are doing the same as their friends and family
- 24% think they are doing better
- 21% think they are doing worse
"Not everyone is going to get a 7% or better return and high returns take time and the right advisor," added Hennick. "The point is to make sure you are getting what you think you are whether that return is good, bad or ugly."
*Hennick Wealth Management, Investment Advisors with Mackie Research Capital Corporation
"From November 28th to December 3rd, 2018, Hennick Wealth Management conducted an online survey of N1,000 Canadian members of the Angus Reid Forum. The survey was conducted in both English and French. The precision of Angus Reid Forum online polls is measured using a credibility interval. In this case, the poll is accurate to within +/- # percentage points, 19 times out of 20, had all Canadians been polled. The credibility interval will be wider among subsets of the population. For example, +/- 6 per cent for Canadian homeowners who have downsized. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error."
SOURCE Hennick Wealth Management
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