The Ontario Securities Commission (OSC) published the results of a survey with more than 2,500 Canadians, assessing investors’ financial literacy. They say the study found a broad range of investment knowledge among Canadian investors. On average, respondents answered 53 per cent of the assessment questions correctly.
They add that Canada has one of the highest financial literacy rates when compared globally, citing statistics from the Standard & Poor’s Ratings Services Global Financial Literacy Survey showing that 68 per cent of Canadians are financially literate – in line with other countries, including Australia, Denmark, Finland, Germany, Israel, the Netherlands, Norway, Sweden and the United Kingdom.
When answering the seven Organisation for Economic Co-operation and Development (OECD) questions in the 27-question survey, they say Canadians in the OSC survey answered correctly 68 per cent of the time, on average.
Interesting and notable for the advisors who serve them, 30 per cent were overconfident and self-assessed their financial knowledge too highly. Self-directed investors were the most financially literate, answering 59 per cent of the questions correctly, compared to 52 per cent for investors with advisors and 49 per cent for those working with a robo-advisor. Comparing investor’s results to their prior self-assessments shows that 29 per cent underperformed their expectations while 14 per cent exceeded their own prior expectations for the test.
Investors had the least knowledge when asked about investment costs and investor protections. The OSC says the fewest correct responses were provided to questions about investment costs, answered correctly only 36 per cent of the time, and portfolio protections, answered correctly 44 per cent of the time.
“As individuals take on more responsibility for their own investing, it is essential that they have enough financial knowledge to effectively participate in Canada’s capital markets. Investors’ knowledge, attitudes, skills and behaviours are all contributors to having a successful investing journey," they write in the introduction to the OSC’s Investor Knowledge Study.
The OSC says the survey will help inform outreach efforts, policy developments and help the securities commission to refine its investor resources.
