Your younger clients need help to understand their finances.
A whopping 82% of young Canadians (18 to 34) feel they don’t have enough financial knowledge or investing smarts, a 2015 CIBC report revealed, while an August 2017 report from Moody’s Investor Service finds that Canadians owe $1.69 for every dollar of disposable income.
Household debt is at an all-time high, and young investors’ lack of smarts could lead to missteps as they navigate the freelance economy (which could require special planning considerations) and experience key life milestones like marriage and kids.
That’s where advisors come in.
Responding to the lack of financial literacy, Advocis wants the financial services sector to help consumers become more financially savvy. To help clients of any age build financial knowledge, Advocis encourages financial advisors to actively promote and participate in MyMoneySmarts.
The website is part of an education initiative on how money, credit and debt management interact with saving, spending and investing. The site is also part of Advocis’s long-term plan to promote financial literacy in support of the national financial literacy strategy launched by the federal government in 2015.
Younger clients also struggle to understand insurance.
Fewer than half of Ontarians aged 25 to 34 say they fully understand their life or supplementary health insurance policy, reveals an October survey commissioned by the Financial Services Commission of Ontario (FSCO).
Only about 49% of those surveyed agreed they understood their life insurance, while about 42% said they understood supplementary health insurance. (Of those responding, 47% had life insurance, and about 61% had supplemental health insurance.)
While most respondents understood common terms like beneficiary, deductible and premium, respondents were less familiar with other parts of their policies.
For example, only 30.5% of those with life insurance knew about rescission rights, which give the purchaser 10 days to return an insurance policy if they change their minds. Just under half (47.3%) of those with supplementary health insurance understood co-insurance, which requires a policyholder to pay a portion of their eligible medical expenses in addition to any deductible.
FSCO has tips, tools, games and quizzes to help Ontarians understand life insurance and supplementary health insurance, and how to assess and select the options that suit their needs and life stage.
About the FSCO survey: Conducted online from October 10 to 18, 2017, by Strategic Communications Inc. using a proprietary panel, the survey comprises a sample of 1,000 respondents statistically weighted to match the gender and age of Ontario mature millennials as per the most recently available census data.