Poor financial literacy and a lack of confidence in financial institutions and advisors is leaving many Canadians in limbo when it comes to retirement planning, according to research by Desjardins Financial Security.
According to the firm’s 2012 Retirement Survey, Canadians who lack confidence in financial institutions and advisors are more likely to feel that retirement planning is confusing and difficult, and are less likely to be engaged in their own retirement planning. They also tend to have lower incomes, fewer savings and are less likely to seek financial information in mainstream media. As a result, they are more likely to feel that their own financial security is poor.
The opposite is true for those respondents who showed high levels of confidence in institutions and advisors.
Of those surveyed, 56.5% of those with low confidence in institutions and advisors said they are less likely to engage in their own financial planning, while 92% of those with high confidence said they are engaged in planning. As well, only 39.7% of those with poor confidence said they believe they’ll make enough money to live comfortably during retirement and only 46.5% said they believe their personal financial security is excellent, while for those with a high degree of confidence, the scores were 75.5% and 83%, respectively.
“This widespread lack of trust in financial institutions and advisors is not surprising, given the financial market instability of the last several years. But by allowing this skepticism to create such profound disengagement, these respondents are putting their futures in jeopardy,” said André Langlois, vice-president of marketing and product development for individual insurance and savings at Desjardins. “The survey results clearly demonstrate that the more informed you are about financial planning, the more confidence you have in financial institutions, and the more successful you are at planning your future. This is why financial literacy is so important.”