ETFs the investment of choice for younger clients

Millennials and generation-X investors are leading the charge in ETF growth, reveals a survey by BlackRock Canada.

Read: The role ETFs play in clients’ portfolios: survey

While 44% of older investors are likely to allocate new investments to ETFs, that jumps to 85% for millennials (age 21 to 35) and 76% for gen-Xers (age 36 to 51), who cite low cost, choice and the ability to diversify as top reasons why they started investing in ETFs.

Overall, one-third of Canadians own ETFs, but a knowledge gap exists. A lack of information about ETFs is the main reason investors don’t use ETFs (38%).

Where investors go looking for information is often determined by age.

For example, more millennials and gen-Xers go to financial websites (38% and 41% respectively), compared to boomers (30%) and silvers (21%). (In the survey, boomers are age 52 to 70, and silvers are 71 to 75.)

In contrast, 49% of silvers and 46% of boomers turn to professional help, such as advisors, brokers or accountants, to learn about ETFs. Only 28% of millennials and 35% of gen-Xers likewise seek out professionals.

Read: 57% of Canadians without an advisor, Leger poll says

Overall, ETF owners are less likely than non-owners to use an advisor (68% versus 79%) and, on average, are more optimistic about the Canadian economy.

ETF-owners are also much more likely to be invested in the markets, with an average of just 19% of their portfolios held in cash. Non-owners tend to hold more cash (35%), and are more satisfied with their portfolio allocations — further indications, perhaps, of age differences when it comes to investing.

The survey had more than 400 respondents from across Canada aged 21 to 75. They had at least $100,000 to invest and were aware of ETFs.

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Staff

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