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COVID-19 has provided financial advisors with an opportunity to build greater relationships with clients that focus on holistic wealth management principles, including behavioural coaching and estate planning.

monsitj/iStockPhoto / Getty Images

The COVID-19 pandemic has been one of the most disruptive events of our lifetimes, unleashing economic effects that have been sharp, expansive and unprecedented.

The stomach-churning stock-market declines of March appear to be behind us, but the worries about a second wave of the pandemic along with the deep scars of job losses, increasing debt loads and continued economic uncertainty remain top of mind for most Canadians.

The pandemic has changed our lives completely, and we have to assess its true impact on the household finances of many Canadians as we begin the transition toward recovery.

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For small-business owners, their employees and others who have borne the heavy brunt of this crisis, economically, retirement planning will become even more important to ensure they’re able to make up for this difficult time.

For some investors, this crisis has tested their appetite for risk and has encouraged others to seek a greater level of financial advice and knowledge.

For financial advisors, COVID-19 has provided an opportunity to build greater relationships with clients that focus on holistic wealth management principles, including behavioural coaching and estate planning.

Although economic recovery is already underway, getting business activity back to prior levels could take some time given the health risks and the continued adjustment to a “new normal” in our society.

Profound economic shocks have historically accelerated certain trends that were already underway, leading to changes in society and consumer behaviour. Amid so much change today, there are three things that need to happen to help us emerge stronger and give middle-class investors the best chance for long-term success.

1. Improve transparency on investment fees

This crisis is forcing many Canadians to evaluate their expenses to ensure they’re getting value for them. We need to continue on this track by improving investment fee transparency in order to truly help investors understand what they’re paying for when receiving financial advice and products – particularly middle-class investors who will need the help of financial professionals to reach their retirement and savings goals.

A recent CFA Institute study out of the U.S. found that full disclosure of fees and other costs is a key factor among 83 per cent of retail investors surveyed in creating trusted relationships with an advisor.

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Kathy Bock, managing director and head of Vanguard Investments Canada Inc.


We’ve seen signs of progress on this matter, with the Canadian Securities Administrators moving to limit or ban the use of deferred sales charges on the sale of mutual funds. That’s a strong signal and a move in the right direction.

But more can be done to help make investment fees and the cost of financial advice more transparent and aligned with other professional services, in which clients are fully aware of what and how much they’re paying for the services provided.

As an industry, we must provide our clients with simple and meaningful disclosure of investment costs in a way that’s easily understandable. Our credibility and the trust of investors depends on it.

2. Support innovation in the delivery of financial advice

The financial services industry gone through – and will continue to undergo – significant changes as a result of COVID-19. New technologies and evolving needs have raised the expectation for advisors to make interactions with clients more digital and mobile-friendly. That trend is poised to accelerate further in the months and years ahead.

Smart use of technology can create tremendous value and opportunity for all financial services firms to deliver better capabilities at a better price point for investors. Making financial services more accessible to a broader category of investors can have a significant long-term economic benefit.

A supportive regulatory framework is needed to help accelerate innovative approaches in the delivery of digital financial advice and solutions that are investor-focused.

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3. Strengthen Canadians’ financial literacy

The Ontario provincial government’s recent announcement to introduce enhanced financial literacy courses in the updated school curriculum that will take effect in September is an encouraging sign.

The recent bout of extreme market volatility and the fear that gripped many investors during the past few months shines a light on the importance of having strong financial advice and acumen in sticking to your long-term plan.

For investors, changing your strategy as an emotional response to market downturns can be a huge mistake, as many learned when they moved money to the sidelines in March only to miss out on the recovery that followed.

Strengthening financial literacy is a key component of helping Canadians save more and invest effectively. Policy-makers and regulators need to adapt and become more proactive and collaborative in helping Canadians improve their financial literacy and overcome a potential retirement savings gap in a future low-growth economy.

Kathy Bock is managing director and head of Vanguard Investments Canada Inc. in Toronto.

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