Almost all Canadian investors become anxious when they think about their investments — especially in light of the recent market volatility and the overwhelming amount of financial information available to them, says Julie Barker-Merz, president of Toronto-based Bank of Montreal’s (BMO) discount-brokerage business.
A study conducted for BMO InvestorLine found that 97% of Canadians are anxious when they think about investing and making decisions concerning their investments. The most prevalent reason for this nervousness is fear of financial loss, with 47% saying they were anxious for this reason. Other causes include anxiety over not receiving a “good” return on their investments, with 40% stating this is the case; 33% are most worried about how market volatility will affect their investments; and 32% are concerned about selecting the “right” investments.
Canadian investors’ current level of nervousness is understandable, considering the uncertain economic conditions, which were well represented by the Bank of Canada’s surprise interest rate cut in January, Barker-Merz says.
Although financial advisors cannot change the state of the economic markets, they can help investors decipher the vast amount of information available to them and guide them to the proper resources.
“If you leave it in the hands of a consumer to go online and search what to invest in or [research] market volatility, there’s so much information out there,” Merz says. “It’s the advisor’s responsibility to aggregate the information, to send it in chunks and bite-sized information that won’t overwhelm the consumer.”
And having advisors acting as resources for clients appears to be necessary as BMO’s study also found that 90% of Canadians are generally confused about investing. The area that causes the most confusion is the ability to find investments that will yield the best return with minimal risk, with 38% saying this confounds them. One-quarter of Canadians are confused about which investment option will best suit their risk tolerance and life stage; 23% are unsure of whether they will know when to change their investment mix; and 23% are confused about deciding whom to entrust with their money.
The results also indicate that more women than men tend to experience this anxiety and confusion regarding their investments. For example, although 43% of men fear financial loss, exactly 50% of women stated this is something they are very worried about. And while 20% of men are confused about which investment option is best for their risk tolerance and life stage, this is the case for 30% of women.
Barker-Merz, who works closely with BMO’s “women in wealth” initiative to attract women employees and women clients to the bank, says she repeatedly hears that women just want to know they are going to be financially stable.
The results of this research provides an opportunity for advisors to have more thorough conversations with women clients to help those clients feel as confident in times of economic uncertainty as they are in times of prosperity, she adds.
“It has nothing to do with [women’s] level of education or comprehension. It just has to do with how men and women approach their investments and the degree of depth a woman might like to go into that maybe a man won’t,” Barker-Merz explains. “In times of market volatility, women may ask more questions and so it’s up to us to do a much better job in having conversations with them.”
The results for the survey come from online interviews with a sample of 1,004 Canadians that hold an investment portfolio. These interviews took place on July 13-14.