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Bank towers are shown from Bay Street in Toronto's financial district, on Wednesday, June 16, 2010.

Adrien Veczan/The Globe and Mail

Canada's big five banks are falling short when it comes to providing financial advice in bank branches for Canadian investors.

Eighty-seven per cent of retail bank customers in Canada say they are interested in receiving financial advice or guidance from their bank. However, just 33 per cent of retail bank customers say they receive financial advice, according to the J.D. Power 2018 Canada Retail Banking Advice Study, released Monday.

For many Canadians, retail bank branches are the first point of contact for financial services, but when it comes to providing financial advice, the banks are are dropping the ball.

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Among the most common types of advice retail bank customers seek are investment-related advice (47 per cent); quick tips to help improve their financial situation (45 per cent); retirement-related advice (42 per cent); advice to help keep track of spending and household budgets (32 per cent); and in-depth financial review (30 per cent).

In addition, almost 30 per cent of customers younger than 40 years old say they are "very interested" in receiving advice from their bank.

In recent years, Canada's largest banks have been working to improve customer satisfaction levels through the use of technology, saidPaul McAdam, senior director of the banking practice at J.D. Power.

"The industry's service improvements have led more customers to view their retail bank as a viable provider of advice," said Mr. McAdam.

"The challenge for banks is getting the advice formula right and delivering it in a personalized manner across all channels—not only at the branch, but also via the website and mobile app."

As a result, the banks have a huge opportunity to leverage a combination of in-person and digital interactions to provide advice and guidance for clients, added Mr. McAdam. "Banks could do more delivering advice digitally."

But the digital space is an area they are struggling to excel in.

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Among retail bank customers who received advice from their retail bank, 60 per cent of those who received face-to-face advice felt it completely met their needs. That number falls to 37 per cent among customers who received advice digitally (bank's website or mobile app) and to 35 per cent among those who received advice via email.

Moreover, 58 per cent of customers want to receive advice through their bank's website and mobile app, but only 10 per cent of them have received advice in this manner. That number jumps to 62 per cent for customers under the age of 40 seeking digital advice.

"Customer demand is certainly strong – with younger as well as older customers,"says Mr. McAdam. "Banks realize this and are actively moving beyond creating technologies that are focused on commodity tasks and reducing human contact. In their efforts to compete with brokerage firms, financial planners and FinTech companies, banks are investing to develop digitally-enabled relationships that are deeply personal, too. In practice, we are seeing – and will continue to see – banks work to use online, mobile and social platforms to deliver information, alerts, advisory services and planning tools that are integrated into customers' lives.

The use of roboadviser platforms at Bank of Montreal and Royal Bank of Canada could see these numbers increase over time as online portfolio managers continue to gain traction in the Canadian market.

Industry concerns

While many of the major banks are able to offer full financial planning services within the branch network, one key concern within the industry when it comes to bank led advice is the sale of proprietary products.

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Retail branch advisers are not able to provide clients with a full range of investment products – including not being able to sell exchange traded funds, investments that typically provide lower investment fees than traditional mutual funds. As well, retail branch advisers are not able to sell third party products to bank clients.

"Retail branch advisers can only get around to so many clients; and many of them will focus on those they think will generate the most business," said Dan Hallett, a principal with HighView Financial Group. " While bank branch advisers are technically salaried, they have a variable component to their compensation. While bonus formulas vary, generally clients that do more business with the bank – either by bringing lots of business in one line (e.g., a large investment portfolio) and/or a wider variety of business (e.g., investments, residential mortgage, business loan, etc.) – are the ones that will really drive bank advisers' bonuses."\

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