The Canadian market may be recovering but the confidence of Canadian investors is lagging. According to the latest Manulife Financial Investor Sentiment Index, Canadians continue to approach investment and savings vehicles with wariness, evidence by a one-point dip to a level of +21 on the Index.
Quebec Investors Least Confident
Skepticism is strongest amongst Quebecers. The Index sits at +8 in la belle province, which, according to Manulife Financial, is a measly three points higher than levels before the economic crisis in 2008. Asked whether it was a good time to invest in products like Tax-Free Savings Accounts (TFSAs), their own home and mutual funds, Quebecers ranked lower than Canadians from any other province.
But, says Guy Couture, regional vice president of retail markets at Manulife Financial, in a press release about the findings, Quebecois skepticism may be healthy.
“In comparison to other provinces, Quebec leads the way with more than half of residents reporting that they are on track with their financial goals (53 per cent).”
Things Are Looking Up… Eventually
While Canadian investor confidence is still low, there is a general sense of cautious optimism about the future. Close to half of respondents in every province reported feeling that they will be in a better financial position in two years from now.
“Previous survey results indicated that Canadians were trying to do it all — pay off the mortgage, maintain their lifestyle, save for retirement, etc.,” says Paul Lorentz, executive vice president of retail markets at Manulife Financial. “I think many of them have realized that they can’t do it all and we need to make decisions.”
Status Quo Takes Back Seat To Reduced Spending
In the May 2013 Financial Investor Sentiment Index survey, Canadians reported that their second financial priority was to maintain their current lifestyle. In this most recent survey, that was replaced by reduced spending. In both surveys, the number one priority was to pay off their mortgage.
“I suspect that is why many of them are still optimistic about the future, because they have changed their priorities and feel better about how they are using their cash flow,” Lorentz says.
Those With Pros More Confident
In this survey and in previous ones, there has been a clear correlation between investor confidence and working with a financial advisor. Forty per cent of Canadians report having an advisor, which has a significant impact on Index score. For those without an advisor, the Index score is +16. For those with an advisor, the score jumps to +27.
“Seven of 10 individuals with $150,000 in investable assets, or $75,000 in household income, use an advisor,” Lorentz says. “The benefit of an advisor is that they help create a plan that works for the household and that typically results in individuals saving more and making more disciplined investment decisions.”
“Most times, it is difficult to see if you are really making progress, but having an advisor and a plan provides that additional peace of mind for many Canadians.”