Young investors more financially conscious

Canadian investors aged 25 to 34 drove a two-point increase in the latest Manulife Financial Investor Sentiment Index as younger people are becoming increasingly financially conscious.

Read: Advising Gen Y

The latest results released today show the index up two points since November 2012, to +22, with overall index ratings highest for the youngest group of Canadian investors — those 25-34 — at +26. Results for affluent Canadians — household decision-makers with an income of $75,000+ and investable assets of 100,000+ — are similar to younger investors who are significantly more likely to provide high Investor Sentiment Index scores.

The +26 ranking marks a substantial increase over November 2012 sentiment scores when Canadians aged 25-34 had the lowest overall sentiment ranking at +15. Today, 55% of younger Canadians (up from 46% in the last index) are more likely to say that they are in a better financial position today than two years ago and more than half (52%) remain optimistic that they will be in a better position two years from now.

While the number who say they are on track to meet their current financial goals remained steady at 37%, there was an increase in the number of younger Canadians who believe they are ahead of plan — 7%, up from only 4% in the last index. Additionally, 41% of younger investors are more likely to say they are behind on their progress toward their financial goals, but are likely to catch up.

Read: 4 ways to help Gen Y plan for retirement

Despite the optimism in investing and saving by younger Canadians, the index shows that the majority of Canadians are focusing on paying for today’s lifestyle and being more conservative in their spending, rather than focusing further into the future.

Half of Canadians (49%) indicate they have taken steps to reduce their spending this year however when it comes to longer-term financial planning, more than one in four (26%) said they do not have an overall financial plan in place. Of those who do, only half (52%) have reviewed their plan in the past two years. Only 3% of Canadians indicated that obtaining or updating a financial plan was among their priorities for this year.

“The overall index — which is +29 for Canadians with a financial advisor compared with +19 for Canadians without an advisor — clearly shows that having access to professional financial advice helps [investors] stay on track and can provide a certain peace of mind,” says Paul Lorentz, executive vice-president, Retail for Manulife Canada.

Canadians appear to be heeding the advice of the Minister of Finance and the Governor of the Bank of Canada to reduce consumer debt. They are concentrating on paying down debt (41%), trying to maintain their current lifestyle (38%), and paying off their mortgages (23%). Nearly half (44%) say they will relax at home or not take a vacation this summer and of those who are vacationing, approximately two-thirds say they will pay cash for their travels and they will spend about the same amount as they did last summer.

Read: Put insurance on clients’ travel checklists

Additionally, less than one in ten (9%) Canadians — and only 3% of younger Canadian investors aged 35-44 — indicate that saving for retirement is one of their key financial priorities this year. Only 45% of Canadians indicate that they feel they have sufficient retirement savings set aside to maintain their current lifestyle.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.