If you spend a lot of time educating clients, that might be because Canadians’ financial literacy leaves a lot to be desired.
In a poll from the Angus Reid Institute, most Canadians presented with a list of 18 common banking and finance terms said they were “very confident” in the meaning of only two: savings account and high-interest savings account.
Many respondents were at least “fairly confident” in their understanding of half the terms canvassed, with six in 10 expressing this level of confidence in nine of the 18 terms in the poll.
Women and younger Canadians tended to express less confidence in their financial understanding, with young women especially uncertain in comparison to men their age.
“The uncertainty women of all ages express relative to the men in their age groups may reflect a genuine gap in knowledge,” says the poll. “But it could also be a product of overconfidence on the part of men—a tendency that has been shown in some academic research.”
The lack of confidence expressed from younger respondents doesn’t necessarily mean they aren’t taking control of their finances. A report on U.S. millennials and money habits revealed that younger Americans are indeed saving (63%), and are more likely to have savings goals compared to older generations.
In the Angus Reid poll, wealthier Canadians were more likely to express confidence in their understanding of all 18 terms.
Tax-related terms were among the better understood terms. More than eight in 10 respondents (82%) expressed confidence in their knowledge about RRSPs, and almost as many (72%) said the same about TFSAs.
Respondents were least confident in their understanding of bitcoin, with 70% expressing uncertainty about the term. Other poorly understood terms were corporate bonds (66% were uncertain), fixed/variable APR (68% uncertain), income drawdown (69% uncertain) and premium bonds (also 69%).
For more details, including methodology, see the full survey.
About the survey: The Angus Reid Institute conducted an online survey from Dec. 20 to 21, 2017, among a representative, randomized sample of 1,516 Canadian adults who are members of the Angus Reid Forum. For comparison purposes only, a probability sample of this size would carry a margin of error of +/- 2.5 percentage points, 19 times out of 20.