Every once in a while, Norman Myden has a little extra money to put into the stock market. He has a full-service broker, but sometimes prefers to pull the trigger himself.
"I don't do it very often, but if there is something particular that I can do quickly, I'll just go ahead and do it myself," said the Calgary-based chartered accountant. "I buy the odd stock, but I'm not a financial planner - I don't have the time or the ability to do the research. I think that's what a broker is supposed to do for you."
It's no secret that more Canadians are taking their trading online - analyst firm Investor Economics says that new account openings in the fourth quarter were 54 per cent higher than a year ago - but that growth may not have come at the expense of traditional investment advisers.
A report by J.D. Powers and Associates showed 36 per cent of investors use both an online trading site and an investment adviser - up from 25 per cent last year. The number jumps to 50 per cent for those who invest through their banks.
"There's been a lot of talk about investors being scared and fleeing their advisers as the market hit bottom," said Lubo Li, J.D. Power's senior director. "While that's part of the story, it's not the whole story. What's happening is people are retaining their advisers for complicated issues, and turning around and placing their own trades."
It's a development that professional money managers know they have to accommodate, says Sheryl Purdy, vice-president of Leede Financial Markets - and Mr. Myden's adviser.
"Any research he does online adds to our discussion and I strive to help teach him more," she said. "Yes, I am aware that he still maintains an account for his online trading wishes; this does not bother me whatsoever. As his full-service broker, I know his realistic risk tolerance, and we have clearly established his objectives and work as a team making appropriate choices for him."
For many, the main issue is price. At the height of a bull market, investors may not have paid as much attention to the cost of trades. But with traditional brokerages charging upwards of $200 a trade - versus $10 online - investors are changing their behaviour.
"This has created a new frugality, a situation in which an investor might call their adviser to get recommendations on portfolio mix and stock selection, but then turn around and place their order online," Mr. Li said.
Brian Jackson, a financial planner at Ottawa's Independent Planning Group Inc., said many of his clients leave him in charge of their retirement accounts, but make their own trades on the side. It's in their best interest to keep him informed, he said, so he can help manage their asset mix, regardless of where their money is invested.
"My client is my client, whether they are doing something with me or not," he said. "If I'm really going to give the best advice, I need to know what they are doing and make sure it fits with what I'm doing. I can't give them overall advice if I have blinders on."
Meanwhile, investors' relationships with their advisers deteriorated in 2009, according to the report, and they are expressing their frustration by withholding recommendations to friends and family members. Only 24 per cent of Canadian investors surveyed said they would "definitely" recommend their primary investment firm, down from 32 per cent in 2008.
Ten per cent said they were likely to switch advisers later this year, compared with 6 per cent last year.
The Canadian Full Service Investor Satisfaction Study - in its fourth year - rates investor satisfaction on a 1,000-point scale. The reading slipped 30 points since the beginning of the year to 693. The report is based on responses from 65,000 investors who use investment services with financial institutions in Canada. The survey was conducted in May, 2009.
By the numbers
Percentage of investors surveyed who said they would recommend their current investment firm; down from 32 per cent last year.
Percentage of investors who expected to switch advisers this year; up from 6 per cent last year.
Percentage of investors who use both a full-service broker and also trade through a discount brokerage; up from 25 per cent last year.
Source: J.D. Power and Associates