Less than one-fifth (16%) of Canadians would seek help from a financial advisor when they’re preparing for retirement, and this lack of professional guidance might explain the large discrepancy between Canadians’ expected retirement income and their actual savings habits, suggest the results of a new survey from Toronto-based BlackRock Asset Management Canada Ltd.
Although 60% of Canadians state they have started saving for retirement, the BlackRock 2015 Global Investor Pulse survey indicates that they are not saving nearly enough to satisfy their own financial expectations once they stop earning a salary. In fact, survey participants state that they expect an average annual income of $46,900 for a 25-year retirement. However, the average Canadian’s savings was found to be $70,700, which would barely be enough for 18 months of retirement income.
The survey, which analyzed the responses of 2,000 Canadians, also finds that participants lack investment knowledge, with only 35% claiming to be informed on the topic and 51% comparing investing to gambling. This is where the investment industry needs to step up and help Canadians become more informed on their investment options, says Karrie Van Belle, managing director with BlackRock Canada.
“The results suggest that the investment industry, and investing in general, has something of an image problem among Canadians,” says Van Belle in a statement. “Given recent market volatility, that might not be surprising, but there’s clearly a need for a renewed commitment to financial literacy and investor education, not just to inspire confidence in the markets, but also to help Canadians realize that they do have choices.”
Should Canadians become more comfortable in seeking professional financial advice, they might be surprised at the satisfaction they feel if the reaction of survey participants who have an advisor is any indication.
With 38% of survey participants saying they deal a financial advisor, 67% of those who depend on the advice of independent advisors are very satisfied with the service they receive. The second-most popular segment of advisors is those in full-service bank-owned brokerage firms, with 63% of participants expressing their happiness with this group. Less than half (46%) of Canadians who deal with advisors located in bank branches are happy with their service.
BlackRock’s survey also asked Canadians for their preferred methods of accessing financial guidance. Digital sources of information are important, with 59% stating they go to online sources to make long-term decisions about their savings and investments. That number jumps up to 73% with younger survey participants between the ages of 25 and 34.
Nevertheless, almost half (44%) of survey participants who use online sources still say they would like some level of personalization in the investment process.
“Good advice can and should come in many forms, and Canadians are telling us that they appreciate the convenience of online accessibility,” says Van Belle. “However, whatever the platform, they are also demanding that the information they get is relevant to them. As alternative forms of advice grow, it’s an opportunity for the investment industry and investors alike.”