Canadians admit their financial knowledge is not up to scratch but many are keen to start saving – particularly when it comes to a child's education, according to recent research from the Financial Consumer Agency of Canada (FCAC). And financial advisors are in an excellent position to help their clients learn more and reach their goals.
"Financial advisors have a great opportunity at many different points in their clients' lives to add financial education," said Jane Rooney, Canada's financial literacy leader, a newly created role under the direction of the FCAC. "They're hugely valuable [as] frontline individuals working with individual Canadians helping them to improve their understanding." Rooney spoke to the Economic Club of Canada at a Toronto event on Wednesday.
More of their clients than advisors realize may need help understanding the basics of finances, according to recent study results from the FCAC and Statistics Canada. Study results show that six out of 10 Canadians rate their own financial knowledge as poor while less than half have taken time to create a household budget. As well, six out of ten Canadians do not know how much they need to save in order to maintain their desired living standard in retirement.
The study, called the Financial Capabilities survey, tests the financial acumen of Canadians in five areas: keeping track, making ends meet, planning ahead, staying informed and choosing financial products. This year's report included results from 7,000 Canadians. This is the second such survey fielded by the government agencies. The first study was completed in 2009.
While how best to plan for retirement remains a bit of a mystery for some Canadians, the majority people do understand the importance of saving for education. According to the survey, 55% of Canadians in the lowest income bracket are putting money aside for their child's education. That number only rises with income levels. For example, four out of five Canadians in the highest income bracket say they are saving for a child's post-secondary education.
Moments such as those are just one of the life events that offer advisors opportunities to educate clients about their finances continuously. "Financial literacy is not just about financial literacy month or a campaign for once," said Rooney. "It's something that happens all throughout the year."
The survey also found that immigrants are keen to learn and make use of different savings vehicles for their future. Almost 33% of new immigrants – individuals who have arrived in the country since 2000 – have opened a tax-free savings account (TFSA), according to the study. That's up from the 13% of new immigrants who had done so in 2009.