Ongoing market volatility has made Canadian millennials an anxious group, but it seems that many of these young adults are turning to financial advisors to talk them through volatile times, according to new research from Toronto-based Sun Life Global Investments (Canada) Inc. (SLGI) released on Thursday.
Close to half (44%) of millennials would describe themselves as somewhat or highly risk averse and another 44% say that they have a conservative approach to investing, according to the findings from SLGI’s 2016 Market sentiment report: market volatility makes a difference, which explores investors’ investing attitudes during uncertain economic times. This nervousness about the market is leading 48% of millennials to have more frequent conversations with their financial advisor, which is more than any other age group.
“Financial advisors may want to take note. Perhaps because it’s one of their first experiences with choppy markets, younger investors could be expecting more frequent touch points,” the research states. “Consider a communication strategy that’s tailored to a client’s age and experience in the markets.”
Millennials are also most likely to sell their investments for cash, with 50% of this group saying they made the move out of fear of losing money. The second-largest demographic to make the same move out of fear is Canadians between the ages of 31 and 47, with about 30% saying this is the case. Retirees who are 67 and older are the third-largest demographic, with about 20% selling their investments for cash because they are scared to lose money.
The report also found a stark difference as to why men and women let go of their investments. Although approximately one-quarter of men would sell their investments to put that cash into another investment, only about one in 10 women say this reason applies to them. However, about 30% of women would sell out of fear of losing money compared with around 13% of men.
Understanding this difference is important to advisors’ ability to customize their advice for different clients, the report suggests: “These results suggest that when markets get rocky and emotions weigh more heavily in our decisions, investment education and advice that’s tailored differently for men and women could be especially important.”
SLGI also polled advisors about the topics that provoke the most questions from clients. Advisors say that some of the most popular topics are the Canadian stock market; the probability that clients will meet their financial goals; real estate prices; and portfolio changes.
Ipsos conducted the online survey of 521 adult Canadians between March 14 and April 1. Investors were required to have $25,000 in investible assets. PMG Intelligence conducted a telephone survey within that same time period of 500 advisors that were drawn from the market research firm’s own list of advisors.
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