Gen Y will be poorer than parents

Young Canadians aren’t getting ahead financially, finds Manulife Financial’s latest Investor Sentiment Index.

And they don’t expect to get a boost from inheritances either, it adds. That’s because about one-in-four (29%) of all people across the country plan to leave less than $100,000 to family members, and only 2% say they’ll give $1 million or more.

Further, Gen Y may not have much to leave their own families since nearly half (43%) haven’t given any thought to how much they’ll leave to their heirs, says the index. It adds as many as 13% say they won’t pass on any money.

Read: Budgeting tips for Gen Y clients

This trend may be occurring since almost half (46%) of those aged 25 to 34 say they’re worse off financially than two years ago, says the index, along with 40% of those between the ages of 35 and 44.

“Young Canadians will be the first generation to not be better off than their parents,” says Paul Lorentz, executive vice-president of retail markets at Manulife Financial.

Read: Get Gen Y to talk insurance

But there’s a silver lining: most Gen Yers (62%) say their financial positions may improve over the next two years. More than half (60%) of those between the ages of 35 and 44 agree.

Read: Young entrepreneurs will be your next big clients

Debt is top priority

Investors of all ages made a significant shift in their financial priorities for 2014. Last year, Canadians wanted to pay down debt (31%) while maintaining their current lifestyle (22%).

Now, only 1% plan to live as before. Instead, they want to reduce spending (11%), save for retirement (9%) and for emergencies (8%), and pay off mortgages (8%). And still, 29% aim to cut down all debts.

Read: Homeowners worry they’ll retire with debt

“Canadians are also more aware of the financial choices they’re making,” says Lorentz.

Read:

• Debt hurts families
• 3 tips to reduce debt

How can you help?

Of all those polled, 40% say advisors helped them over the past year. In fact, the index score for people with planners is +27, compared to only +16 for those who haven’t sought assistance.

People with advisors are less likely to focus on debts, finds the index, because they’re also aware of their retirement goals. As such, most are optimistic and say they’re on track with their current financial goals (52%), compared to 36% of those who plan for themselves.

For more on how to help clients, read:

Take your tax planning to the next level

Why investors need advisors

Gaining with globe-trotting portfolios

3 strategies to help confused clients