As the industry continues to examine whether an advice gap exists in Canada among mass market households, a new poll finds that a significant proportion of middle-income households aren’t working with financial advisors, with negative results.
A poll conducted for Primerica found that more than one-third (37%) of middle-income Canadians don’t have access to a financial professional they feel comfortable with. (The poll defines middle income as having a household income between $20,000 and $100,000.)
No insight is offered, however, on why the lack of access exists. (Trust isn’t the issue: in line with other research, the poll revealed overwhelming trust in the information provided by financial professionals.)
What is clear is that the lack of access to professional advice is a problem. The poll found that 61% have made at least one costly financial decision, with an average loss of $29,000. Also, about half (47%) fear they aren’t saving enough for retirement.
Most of those surveyed who haven’t seen a financial professional believe they would benefit from seeing one (75%), and they’re likely right. The poll found that client outcomes are better for those who receive financial advice.
For example, 56% of middle-income Canadians who hadn’t met with financial professionals had also never invested their savings. Of those who had met with a financial professional, only 22% had failed to invest.
Further, a greater proportion of those who met with a financial professional scored a C or higher on various financial behaviours, such as saving and investing, relative to those who didn’t (82% versus 54%).
Working with a financial professional might be particularly important considering Canadians’ low rates of financial literacy. The survey found that only one-third of middle-income Canadians feel confident with general concepts such as saving and budgeting, and fewer than two in 10 could explain the concept of compound interest or how to invest in a financial product.
For more details, read the Primerica report.
About the poll: Conducted by Golfdale Consulting in February 2019, the online survey polled a representative sample of 1,000 Canadians aged 18 and older with household incomes between $20,000 and $100,000. All data was weighted to Canada Census (2016) based on age, gender and region. The margin of error is about 3%.