Lack of knowledge, time and trust when dealing with finances

All Canadians lack when it comes to finances

Each cohort faces its own unique set of challenges

(Artpartner/Getty Images)

(Artpartner/Getty Images)

Investor education. These two simple words can cause eyes to glaze over, minds to wonder and brows to furrow. But it doesn’t have to be this way.

In a new report, released today by the Investor Education Fund, reveals that Canadian investors feel under-informed and overwhelmed when it comes to investing and saving for their retirement, and, despite a change in needs over a person’s lifetime, Canadians of all ages were grappling with understanding their finances.

Different generations however face different challenges.

Under 30: Lack of Knowledge
Respondents under 30 are more likely to say they don’t understand most of the terms used by financial advisers and experts (64% versus 49% across all ages).

30s and 40s: Lack of time
Respondents in their core working years are more likely to say they don’t have enough time to focus on their investments (57% versus 45% overall).

50 and older: Lack of trust.
Respondents age 50 and older say their top barriers are conflicting information from too many sources and not knowing what to believe (40%) and being unsure about where to find unbiased information about investing (36%).

“People have difficulty conceptualizing financial and investment issues,” explains Tom Hamza, president of Investor Education Fund, a non-profit organization founded by the Ontario Securities Commission that provides unbiased and independent financial tools.

“That means we can’t just write about these concepts, we need to make them real. We need to give people a canvas and provide tools that allow people to personalize their learning.”

At present, IEF offers more than 20 calculators, as well as hundreds of information sheets on everything from the basics of financial literacy, to questions you should ask your adviser.

“We know that as assets grow, investors rely more and more on the advice of their adviser,” says Hamza. In fact, one-third (32%) of respondents stated their top source for their investment advice was an adviser, while more than a quarter (27%) got their advice from the media.

The concern, says Hamza, is that if someone is undisciplined and dives into an investment based on a news story, or some random advice, they may not realize the impact of this ad hoc, random style of investing. He points out that the site offers investors insight into questions to ask and when to be cautious, along with calculators and tools to help them plan.

“To be a catalyst and to change investment behaviour, we have to provide financial learning that is active, unbiased and tools-based,” explains Hamza. He explains that the tools on the website help because they personalize the lessons: letting people plug in numbers that reflect their own situations, such as how to pay down their mortgage, retire safely, or understand their risk.

“With this survey we see that Canadians who come to our website are overwhelmed,” says Hamza, “but our site provides them with lessons that can make a big difference to their confidence and their ability to meet long-term financial goals.”

As a result, Hamza knows that now, more than ever, his team can’t stop. “In the weeks to come, we have some really exciting tools being launched.” While he can’t reveal the specifics, Hamza suggests that the new tools will help people examine their current portfolio and future expectations, as well as allow them to compare their portfolios to industry benchmarks.