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Canada Financial Literacy Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Financial Literacy - Canada market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Consumer Question Topics

  • Product Ownership
  • Financial Challenges
  • Financial Education
  • Budgeting and Savings
  • Financial Planning
  • Knowledge of Financial Topics

What You Should Know

The level of financial literacy in Canada is not very high. This has implications for the banking and investment industries as well as for the long-term personal financial security of many Canadians. Without an understanding of basic financial concepts, people are not well equipped to make decisions related to financial management. People who are financially literate have the ability to make informed financial choices regarding saving, investing, borrowing and investing. Financial knowledge is especially important in times where increasingly complex financial products are easily available to a wide range of the population. Moreover, changes in the pension landscape transfer decisionmaking responsibility to participants who previously relied on their employers or governments for their financial security after retirement. Financial illiteracy can carry significant costs.

Meanwhile, the potential benefits of financial literacy are many. People with strong financial skills do a better job planning and saving for retirement. Financially savvy investors are more likely to diversify risk and take a longer-term view of investing. Given the many ways financial literacy affects financial behaviour, it is important to understand the extent of consumer understanding of basic financial concepts as well as the degree to which financial skills fall short among groups like the young, women and the poor.

About the Report

This Report examines how consumers feel about the way they manage money, product ownership and financial challenges faced, their financial management habits and how they get information about personal finance.

Regional classifications

  • Prairie Provinces: Alberta, Saskatchewan and Manitoba
  • Atlantic Provinces: New Brunswick, Newfoundland/Labrador, Nova Scotia and Prince Edward Island

Income

Throughout the Report, income data refers to annual household income.

Expert analysis from a specialist in the field

Written by Sanjay Sharma, a leading analyst in the Financial Services sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

A concerted effort from government, industry, the school systems and the general public is required to improve the financial literacy of Canadians as its importance has perhaps not sufficiently caught on in the public consciousness. Sanjay Sharma
Senior Financial Services Analyst

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Table of contents

  1. Overview

      • Regional classifications
        • Income
        • Executive Summary

            • The issues
              • Less than half of Canadians have used a financial advisor
                • Figure 1: Use of financial advisor, October 2018
              • Lack of sufficient assets is the main reason cited by non-users
                • Figure 2: Reasons for not using a financial advisor, October 2018
              • Around three in four clients cite retirement planning as the primary reason for usage
                • Figure 3: General attitudes towards advisors, October 2018
              • Men and younger clients have a higher attrition rate
                • Figure 4: “I have switched advisors in the past due to the performance of my portfolio” (% agree), by age and gender, October 2018
              • Majority of Canadians uncertain how to evaluate quality of advice
                • Figure 5: General attitudes towards financial advice, October 2018
              • The opportunities
                • Younger Canadians may need more convincing about financial advice
                  • Figure 6: Select attitudinal statements related to value perception (% any agree), 18-44s vs over-45s, October 2018
                • Robo-advisors may impact existing advisory business models
                  • Figure 7: Select general attitudes towards financial advice (% any agree), 18-44s vs over-45s, October 2018
                • Younger clients have more technical knowledge but are more inhibited
                  • Figure 8: Select attitudes towards financial advice (% agree), 18-44 vs over-45s, October 2018
                • Most believe that advisors should do more to market themselves
                  • What it means
                  • The Market – What You Need to Know

                    • Canada’s population is aging
                      • Diminished capacity among seniors a consequence of aging population
                        • Ontario government eyeing more oversight of financial planners
                          • MFDA issues update on total cost reporting
                            • DSC ban, multiple conduct changes coming from CSA
                              • Financial education courses specializing in the elderly would help advisors
                              • Market Factors

                                • Canada’s population is aging
                                  • Figure 9: Population aged 0-14 and 65+, as of July 1, 1995-2035*
                                • Diminished capacity among seniors a consequence of aging population
                                  • Figure 10: Canadian population, by age, 2016
                                • Financial education courses specializing in the elderly would help advisors
                                  • Ontario government eyeing more oversight of financial planners
                                    • MFDA issues update on total cost reporting
                                      • DSC ban, multiple conduct changes coming from CSA
                                        • Know Your Client
                                          • Know Your Product
                                            • Suitability
                                              • Conflicts of interest
                                                • Relationship disclosure information
                                                • Key Players – What You Need to Know

                                                  • HSBC launches foray into digital advisors in Canada
                                                    • Wealthsimple to launch mutual-fund investment firm with in-house advisors
                                                      • RBC’s new robo platform aimed at digitally-savvy clients
                                                        • CIBC becomes the last of the major banks to launch its own ETFs
                                                          • Allianz stepping into the Canadian fixed-income ETF market
                                                            • New partnership gives mutual-fund dealers in Canada greater access to ETFs
                                                              • Fidelity collaborates with Amazon to develop a digital financial advisor accessible via a virtual reality headset
                                                              • Innovations & Industry Developments

                                                                • Wealthsimple to launch mutual-fund investment firm with in-house advisors
                                                                  • HSBC launches foray into digital advisors in Canada
                                                                    • RBC’s new robo platform aimed at digitally-savvy clients
                                                                      • Questrade slashes fees on robo-advisory service
                                                                        • CIBC becomes the last of the major banks to launch its own ETFs
                                                                          • Allianz stepping into the Canadian fixed-income ETF market
                                                                            • High-net-worth investors now able to hold bitcoin fund in registered accounts
                                                                              • New partnership gives mutual-fund dealers in Canada greater access to ETFs
                                                                                • Fidelity collaborates with Amazon to develop a digital financial advisor accessible via a virtual reality headset
                                                                                • Marketing Initiatives

                                                                                  • Investors Group rebrands to better reflect its value proposition
                                                                                    • TD to revamp its discount brokerage firm
                                                                                    • The Consumer – What You Need to Know

                                                                                      • Less than half of Canadians have used a financial advisor
                                                                                        • Lack of sufficient assets is the main reason cited by non-users
                                                                                          • Cost, in-person advice and reputation are the top choice factors
                                                                                            • Most advisors explain portfolio performance
                                                                                              • Men and younger clients have a higher attrition rate
                                                                                                • Majority believe that advisors are a motivating force to save more
                                                                                                  • Around three in four clients cite retirement planning as the primary reason for usage
                                                                                                  • Use of Financial Advisors

                                                                                                    • Less than half of Canadians have used a financial advisor
                                                                                                      • Figure 11: Use of financial advisor, October 2018
                                                                                                    • Older Canadians have higher usage
                                                                                                      • Figure 12: Use of financial advisor, by age, October 2018
                                                                                                    • Bank advisors most commonly used
                                                                                                        • Figure 13: Type of financial advisor used, October 2018
                                                                                                      • Rise of family offices in Canada
                                                                                                        • Older clients prefer independent advisors
                                                                                                          • Figure 14: Type of financial advisor used (select), 18-44s vs over-45s, October 2018
                                                                                                      • Reasons for Not Using an Advisor

                                                                                                        • Lack of sufficient assets is the main reason cited by non-users
                                                                                                          • Figure 15: Reasons for not using a financial advisor, October 2018
                                                                                                        • Fees are also a significant barrier
                                                                                                          • Older non-users more likely to self-manage investments
                                                                                                            • Figure 16: Reasons for not using a financial advisor (select), 18-44s vs over-45s, October 2018
                                                                                                          • Perception of bias cited by almost one in four over-45s
                                                                                                            • Value-add perceptions and trust are other barriers to usage
                                                                                                              • Women non-users more likely to cite insufficient assets while men are more likely to self-manage investments
                                                                                                                • Figure 17: Reasons for not using a financial advisor (select), by gender, October 2018
                                                                                                            • Choice Factors

                                                                                                              • Cost, in-person advice and reputation are the top choice factors …
                                                                                                                • Figure 18: Choice factors when choosing a financial advisor, October 2018
                                                                                                              • … but cost matters less to advised clients
                                                                                                                • Figure 19: Choice factors when choosing a financial advisor (select), users vs non-users, October 2018
                                                                                                              • Older Canadians have stronger preferences when looking for an advisor
                                                                                                                • Figure 20: Choice factors when choosing a financial advisor (select), 18-44s vs over-45s, October 2018
                                                                                                              • TURF Analysis
                                                                                                                • Methodology
                                                                                                                  • Cost and face-to-face meetings matter to nearly three in four consumers
                                                                                                                    • Figure 21: TURF analysis – Choice factors, October 2018
                                                                                                                • Awareness of Financial Advice

                                                                                                                  • Most advisors explain portfolio performance
                                                                                                                    • Figure 22: Attitudes towards financial advice, October 2018
                                                                                                                  • Younger clients have more technical knowledge but are more inhibited
                                                                                                                    • Figure 23: Select attitudes towards financial advice (% agree), 18-44s vs over-45s, October 2018
                                                                                                                  • Female advised clients are less aware of technicalities
                                                                                                                    • Figure 24: Select attitudes towards financial advice (% agree), by gender, October 2018
                                                                                                                • Value Perception

                                                                                                                  • Around three in four clients cite retirement planning as the primary reason for usage
                                                                                                                    • Figure 25: General attitudes towards advisors, October 2018
                                                                                                                  • Men and younger clients have a higher attrition rate
                                                                                                                    • Figure 26: “I have switched advisors in the past due to the performance of my portfolio” (% agree), by age and gender, October 2018
                                                                                                                  • Majority believe that advisors are a motivating force to save more
                                                                                                                    • Figure 27: Attitudes related to value perception about financial advice, October 2018
                                                                                                                  • Younger Canadians may need more convincing …
                                                                                                                    • Figure 28: Select attitudinal statement related to value perception (% any agree), 18-44s vs over-45s, October 2018
                                                                                                                  • … while advised clients are more strongly convinced about their value
                                                                                                                    • Figure 29: Attitudinal statements related to value perception, advised clients vs non-users, October 2018
                                                                                                                  • Four in five clients feel they are better off as a result of financial advice
                                                                                                                    • Figure 30: Attitudes related to value of advisors, October 2018
                                                                                                                  • Most believe that advisors should do more to market themselves
                                                                                                                  • General Attitudes towards Financial Advice

                                                                                                                    • Majority of Canadians uncertain how to evaluate quality of advice
                                                                                                                      • Figure 31: General attitudes towards financial advice, October 2018
                                                                                                                    • Only a minority understand advisor compensation
                                                                                                                      • Women less keen on making their own financial decisions
                                                                                                                          • Figure 32: Select general attitudes towards financial advice (% any agree), by gender, October 2018
                                                                                                                        • Three in 10 18-44s positive on robo-advisors
                                                                                                                          • Robo-advisors many impact existing advisory business models
                                                                                                                            • Figure 33: Select general attitudes towards financial advice (% any agree), 18-44s vs over-45s, October 2018
                                                                                                                        • Appendix – Data Sources and Abbreviations

                                                                                                                          • Data sources
                                                                                                                            • Consumer survey data
                                                                                                                              • Abbreviations and terms