TORONTO, ONTARIO--(Marketwired - Oct. 29, 2013) - Reflecting Canada's relatively strong economic performance following the economic crisis that upended global markets five years ago, Canadian investors are a bit more optimistic about their financial future than their counterparts in the U.S. and elsewhere, according to the first-ever Global Investor Pulse Survey from BlackRock, Inc. (NYSE:BLK).
More than half of Canadian investors (55%) are feeling positive about their financial prospects, compared with 48% of global investors. Yet, despite steady gains in recent years that have pushed some stock markets to all-time highs, less than two-thirds of Canadians say that they are confident they will reach their retirement goals, according to the global survey - one of the largest ever, covering 1,000 Canadian investors at a range of income levels and 16,600 investors in 11 other countries. (For more on the survey and its methodology, please see blackrockinvestments.ca/investorpulse).
And even those Canadians who are upbeat could see their confidence ebb: Only half of Canadian investors feel that they are in control of their financial future, about the same low proportion that feels confident that they are making the right investment decisions.
The No. 1 priority for 44% of Canadian investors is "funding a comfortable retirement" (compared with only 35% globally), but only 64% are confident they can achieve that goal. They were more confident about paying off their mortgages (88%), but less so about paying off other debt (75%) - which was identified as an important priority among 44% of investors.
"What we're seeing is an interesting mix of Canadians' financial conservatism and nervousness coupled with a clear desire to take a more active and informed role in managing their financial future," said Noel Archard, Managing Director, Head of BlackRock Canada. "Like the rest of the world, Canadians are still heavily exposed to low- or no-return cash investments, but there are guardedly hopeful signs that investors are ready to take action to better manage their money."
How seriously do Canadians take financial planning?
In fact, Canadians are among the most active investors around the world. Nearly two-thirds (64%) of respondents said they take financial planning seriously, and 55% said that they are interested in learning more about savings and investments. A combined 60% of Canadian respondents said they use the services of an advisor - professional financial advisor (31%) or a bank advisor (29%) - more than any other country, and double the global average (24%).
The most discussed topics with those advisors: seeking better returns, minimizing risk and developing a retirement plan, all identified as topics of discussion among 35% of respondents. Canadians were more likely than the global average (33% versus 28%) to seek advice on how to protect investments from unforeseen economic events, and they were equally likely to discuss with their advisors how to protect investments and savings from inflation.
Debts, bills and clinging to cash
In Canada, debt and bill payments appear to be contributing to the concerns of average Canadians and having a significant effect on the way they save and invest. The percentage of take-home pay devoted to living costs, bills and debt is high in Canada (48%) compared to the global average (40%), and only slightly below the U.S. and Australia (49%). These costs translate into widespread personal savings deficits. Canadians reported saving, on average, just 14% of their take-home pay each month - just below the global average of 18%, and less than in the US (16%), Australia (17%) or Hong Kong (29%).
Canadian investors also continue to hold a significant percentage of their assets in low- or no-return cash accounts, which accounted for 43% of savings and investments among survey respondents. That's the lowest rate of cash holdings among countries surveyed, and below the global results (56%), but there is little indication Canadians are ready to move out of cash in the next 12 months. In fact, 84% of those respondents holding cash said they plan to maintain or increase their cash holdings over the next year.
When asked what would encourage them to invest more of their cash savings, nearly one in three (32%) respondents indicated "less personal debt," compared with 21% globally. However, "guaranteed return from investments" and "knowing they won't lose my initial investment" were the most significant factors, cited by 42% and 36% of respondents, respectively.
Longevity: a defining financial challenge
Investors are starting to recognize that their retirement savings will need to last longer than many foresaw - even if they aren't yet doing enough to pay for their longer lives.
Those surveyed who were already in retirement had plenty of advice for others. When asked whether, with the benefit of hindsight, there is anything they would do differently, retirees offered:
- Start saving as early as possible (78%)
- Think long-term (58%)
- Save as much as you can (66%)
- Pay off your debts (74%)
- Learn about the different investment products (38%)
- Seek professional financial advice (47%)
"The good news is that Canadian investors at least seem to be recognizing the danger," said BlackRock Canada's Noel Archard. "The challenge for them now is to do something about it."
About BlackRock
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At September 30, 2013, BlackRock's AUM was US$4.096 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of September 30, 2013, the firm had approximately 11,200 employees in 30 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company's website at www.blackrock.com.