Many Canadian investors feel confident about managing their assets, but they don’t have a written financial plan or know their investment profile, according to a study.
The BMO Nesbitt Burns Savviest Investor Index reveals that half of survey participants have a written financial plan and only one in three have updated it in the past year. One-third of respondents do not know what specific investments their portfolios contain.
The study also shows that more than 56% of investors know their investment profile, which identifies their risk tolerance and financial goals.
Despite this, 84% of respondents say they’re confident about managing their wealth.
“While it’s encouraging that Canadians are optimistic about their ability to manage their investments, it’s concerning that such a significant number don’t have a written financial plan and are unclear about what investments they hold,” says Bill Brown, senior vice-president and managing director, national sales manager, with BMO Nesbitt Burns.
“The key to achieving your long-term financial goals is creating a financial plan that starts today. Whether you are saving for a house, a family or a well-earned retirement, a personalized financial plan will help you achieve your goals,” Brown explains, adding that those who are unsure about managing their assets can turn to an investment advisor who can provide them with custom-tailored strategies.
The BMO study also reveals that Canada’s savviest investors are in B.C. The province scored 92 out of 100. Alberta came in second, with a score of 88, followed by the Prairies (86), Ontario (82), Quebec (76) and Atlantic Canada (74).
According to the survey, savvy is defined as having a financial plan, paying attention to market trends, being aware of one’s investment profile and being knowledgeable about how different factors can affect one’s portfolio.
B.C. investors performed well in several crucial areas, including having a financial plan, possessing investment product knowledge and understanding how different circumstances can influence their wealth.
The survey shows that the investment product Canadian investors are most knowledgeable about are guaranteed investment certificates (58%) and mutual funds (55%). They’re least knowledgeable about exchange-traded funds (19%).
Eighty percent of investors understand how their portfolios are affected by interest rates, according to the study. Sixty-six percent understand the impact of currency rates, and 62% understand the impact of credit ratings. Participants are least knowledgeable about the role of stock market fluctuations (54%) and corporate earnings (38%).
Of all age groups, seniors are most likely to know what specific investments they hold (77%).
The BMO survey results are based on online interviews with a random sample of 1,000 Canadians age 18 and over. It was conducted in May of this year.
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