The last time I went to ‘upgrade’ my cell phone plan, a smaller provider had rocked the industry by offering significantly cheaper mobile phone plans. For the month of November that year, all the major providers followed suit and I was able to get a great deal with my provider Rogers. I signed up for a 2-year term with 10 GB of data, unlimited nationwide calling and texting, plus a couple of other features: all for the great price of $80. Oh, and a new iPhone. I was extremely happy about this as I had been paying almost the same price for only 5 GB of data with no opportunity to upgrade my phone in the future. Basically, I felt that I was getting good value for the price I paid.
A couple years later, Josue – my colleague from Winnipeg – needed to update his cell phone account, incidentally with the same provider (Rogers). Naturally, I had recently told him about the great plan I was on, all for the great price of $80. When he got back to the office, I asked about the plan he got and what he told me left me utterly shocked. He had just set up a plan with 12 GB of data, unlimited nationwide calling and texting, plus a couple of other features, for the monthly price of $45! Yes, he got a better plan (2 GB of extra data) for almost 50% less! As we talked about it further, he told me that the service representative at Rogers told him that this was his price because he had a Manitoba number, rather than a BC number ($80/month). Basically, the price you pay for your cell phone plan is completely dictated by where you live. Clearly, Rogers Communication can offer cell phone service in Winnipeg for $45/month, but I fail to see how that exact same service warrants a 200% increase in Victoria!
I do not necessarily have a problem with paying $80 for a cell phone plan (probably because I am used to being robbed); however, after learning about the difference in plan pricing, I do have a problem with the lack of value I feel I’m getting. You see, price is what you pay but value is what you get. Many people tend to fixate on the price of something; however, we would argue that value is what is most important. Consider this,
“Price is only an issue in the absence of value.”
I had no issue paying $80 when I thought I was getting good value. It was not until I learned that someone else was paying a lesser amount for the same thing that my perception of value changed. At the end of the day, the price is usually irrelevant but the value you receive is what matters. According to McKinsey & Company, a global sales and marketing firm, “The real essence of value revolves around the tradeoff between the benefits a customer receives from a product and the price he or she pays for it.” In my case, while the benefits I was receiving had not changed, the (higher) price I was paying widened the trade-off I had to make. So why does this price discrepancy continue?
The Lack of a Truly Competitive Market
While market conditions, demographics and other various factors all play a part, I believe that it is the sole lack of real competition among cellular plan providers that allows these large corporations to essentially “set” their prices in various jurisdictions. While price fixing is illegal, I find it hard to believe that providing a mobile phone service in BC costs twice as much as it does in Manitoba. But what does all of this have to do with the financial services industry in Canada?
Having been in the financial services industry for over 25 years, we have seen the industry continually shrink as larger firms consume smaller firms or smaller firms simply pack it in. According to the Investment Industry Association of Canada’s most recent statistics, the number of investment firms in Canada declined by 15% between 2013 and 2018. In other words, there were less firms to serve a population that had grown by 5.6% in that same time frame. If we are not careful, Canadians may find themselves with little choice in the financial services industry: both in terms of service and cost.
We are not there yet
While there is a possibility that the finance industry might become too consolidated, we are not there yet. In fact, innovation and technology are pushing the industry forward for the betterment of everyone. These advancements are giving us an opportunity to question the norm and explore new ways to solve age-old problems. We are very excited about the future and the ability to change the narrative around financial planning in Canada and what it can mean for people. Embracing these changes will allow Canadians to continue to exercise their ability to choose what they pay for the value they want to receive. Bring it on.
 McKinsey & Company, McKinsey Quarterly, February 1997|Article, https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/setting-value-not-price
 Investment Industry Association of Canada, “IIAC • Securities Industry Statistics”, https://iiac.ca/wp-content/uploads/SIP-Q4-2018-Stats-EN_MN.pdf
 StatCan result from Google search, “Canada Population 2013” & “Canada Population 2018”