Investors’ risk tolerance levels remains stable
The number of investors in the Canadian general public is shrinking, risk tolerances have remained relatively unchanged since 2017, and a growing number of investors say they aren’t comfortable bringing questions to their advisors. These are a few of the findings of the 2020 CSA Investors Index survey conducted for the Canadian Securities Administrators (CSA).
The survey of 7,537 adult Canadians also found that less than half of investors are optimistic about their investment targets over the next 12 months. That said, 60 per cent were optimistic when considering their targets over the next five years. One-in-four or 27 per cent said they had a financial plan, down from 31 per cent in 2012. More than half, 52 per cent who currently have a financial advisor say they know exactly how much they pay their financial advisor, up from 44 per cent in 2012.
In examining the prevalence of fraud, the CSA found the percentage of respondents who have invested money in what turned out to be a fraudulent investment has declined among those over age 55, but would appear to be on the rise among those under age 35. “Since 2006, in every age group over 44, the percentage of fraud victims has declined between two and four points. On the other hand, it has increased steadily for those under 35,” the report’s authors write. The report also examines investor knowledge, optimism about the economy, market expectations, awareness of securities regulators and the use of robo-advisors.
The survey, the sixth investor index survey in the series conducted for the CSA, also found a drop off in investment knowledge between the survey’s 2012 and 2016 samples compared to the 2017 and 2020 samples. Finally, overall use of an advisor is steady, but clients say they are less comfortable bringing forward their concerns and questions when speaking with a financial advisor. “Between 2012 and 2017, comfort bringing forth questions and concerns to advisors dropped from 62 per cent to 52 per cent. This is steady in 2020 at 53 per cent. Comfort is highest among older investors and those with more investment knowledge.”