October 21, 2008
Canadians investment attitudes shift significantly during global financial crisis
Vancouver - National research conducted for the British Columbia Securities Commission shows that, over the last three months, investors have become significantly more cautious and more pessimistic about their retirement standard of living.
Innovative Research Group conducted the first phase of the on-line study of 1,770 Canadian investors in July 2008, with a significant sample of investors who are retired or nearing retirement. Entitled The 21st Century Investor , it focuses on the “Silver Tsunami”, a large group of Canadians who are currently in transition from working to retiring. Following the global financial crisis, a second shorter survey of 1,058 Canadian investors took place between Oct. 16 and 17 to determine whether there has been a shift in investors’ attitudes.
The research is a key component of the BCSC’s Capital Ideas conference being held today in Vancouver. B.C. Finance Minister Colin Hansen opened the conference.
“In light of the recent global financial crisis, we thought it was very important to update our findings about how Canada’s aging population is approaching investment choices,” said Doug Hyndman, BCSC chair. “The more insight we have into what is happening to investors, the better equipped we will be to provide them with the appropriate tools and protection.”
The most recent survey shows that the percentage of investors who think their standard of living in retirement will be worse than it is today has risen from 31 per cent to 44 per cent since July 2008. While those thinking that their standard of living in retirement will be better than today remained the same at 20 per cent.
Survey respondents are also reporting they are more wary about investing in today’s financial climate. Overall, risk averse investors - those who want to protect their original investment and minimize risk - have risen from 40 per cent to 56 per cent since July, with the most risk averse category doubling from 12 per cent to 24 per cent.
There is also a six per cent increase in those feeling more vulnerable to declining real estate values, and less than half (48 per cent) of respondents say they are confident when it comes to making investment decisions, compared to 56 per cent in July.
“As we look at the changing attitudes, it is clear that the first response by investors to the recent financial turmoil is to protect themselves by investing more cautiously and taking fewer risks,” stated Greg Lyle, managing director, Innovative Research Group.
In response to this and other research findings, the BCSC is adding a new tool to its investor education website, InvestRight.org. Guide for Investing: How to Work with Your Investment Advisor will provide practical advice on how to choose and work with an advisor and how to manage an investment portfolio on an ongoing basis. It provides investors with ways to research for information, general guidance on investing, and provides worksheets that the investor can use to ask important questions regarding their investments.
“We believe that this guide will provide information and advice that will help investors take an active role in meeting their investment goals,” said Hyndman. “It will help investors avoid common pitfalls and hold market professionals accountable on an ongoing basis.”
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. If you have questions, contact Ken Gracey, Media Relations, 604-899-6577 or visit www.bcsc.bc.ca for the research report.
Learn how to avoid investment fraud at the BCSC's investor education website: www.investright.org.