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Consumer Insights

Consumer Insights offers an exclusive series of articles analyzing the results of the on-going Financial Comfort Zone Study, conducted by Missis­sauga, Ont.-based Credo Con­sulting Inc. in partnership with Montreal-based TC Media's investment group. (Investment Executive is published by TC Media's investment group.) The survey, conducted monthly in English and French, is designed to gain insight into the relationships among financial advice, financial well-being and overall life satisfaction in Canadian society. The number of respondents is expected to grow to 12,000 within 12 months.

Survey suggests more women than men are confused by financial jargon, and women tend to avoid investment risk

By Rudy Mezzetta | April 2017

Canadian women are much more likely than men to say they find financial jargon confusing and tend to steer away from financial risk, according to recent research conducted by Mississauga, Ont.-based Credo Consulting Inc.

This gender gap in financial confidence and engagement indicates a failure on the part of the financial services sector overall, says one financial advisor, as well as a missed opportunity to address the concerns and priorities of half the population.

"The [investment] industry has to be better at understanding women and what they need," says Karin Mizgala, CEO of Money Coaches Canada Inc. and co-founder of the Women's Financial Learning Centre, both based in Vancouver. "Women are engaged in so many aspects of life - balancing so much - they're overwhelmed. They're not interested in charts and graphs; they're interested in how money can serve them and their families, and help them reach their goals."

Among the Canadians surveyed by Credo, 21% of female survey participants strongly agreed with the statement: "I find financial jargon confusing"; only 14% of male survey participants agreed.

Meanwhile, only 33% of female survey participants strongly disagreed with the statement: "I find financial jargon confusing"; 46% of men disagreed.

In addition, 44% of female survey participants, vs 32% of male survey participants, agreed with the statement: "I avoid financial risk." Furthermore, a lower percentage of female survey participants than men said they owned growth- oriented financial products, such as individual stocks or private-equity shares.

These are some of the findings of the recent edition of the ongoing Financial Comfort Zone Study, a national consumer survey conducted by Credo in partnership with Montreal-based TC Media's investment group. (TC Media publishes Investment Executive.)

Recent reports suggest that women today control a large, and growing, share of investible assets. In one study, Toronto-based research firm Investor Economics Inc. forecasts that the potential size of the market consisting of women with more than $500,000 in investible assets will reach $2.7 trillion by 2024, more than double the $1.2 trillion women controlled in 2014.

Jennifer Reynolds, president and CEO of advocacy group Women In Capital Markets in Toronto, agrees that the financial services sector still may have a blind spot in providing female clients with financial advice.

"Historically, going back decades, it was the male in a couple who generally took care of investments, and I think the industry catered to that particular style," Reynolds says. "Women have a different investing style; they tend to ask more questions and take a bit longer to make an investment decision. The positive element of that is [women] tend to stick with their investments."

Marie Phillips, financial advisor with IPC Securities Corp. in Ancaster, Ont., says she has found female clients to be more goal-oriented in contrast to men, the latter of whom may focus more on measurable results.

"Men typically are the ones who log on to their accounts every day, if they have access, whereas women just want to know if they're on track," Phillips says.

A goal-based approach to financial planning often aligns with many women's lives and priorities, Phillips suggests. For example, women may have more experience than men in coping with interruptions in income because of child care and other family obligations.

Women also may be more concerned than men about longevity risk and making sure they have enough for retirement, says Sara Gilbert, founder of Montreal-based Strategist Business Development.

"Often, men will buy insurance as an obligation because they've been told it's a good idea," Gilbert says. "Women will buy insurance because they don't want to end up being a burden on others."

Many female clients prioritize security over opportunity in their investing, says Lana Robinson, executive director in the wealth strategies group of Canadian Imperial Bank of Commerce in Toronto. This may lead women to favour less risky investment vehicles, such as GICs.

That inclination toward safety can be an issue in long-term planning, however, and represents an opportunity for a good advisor to initiate a dialogue about the appropriate level of risk in realizing a client's goals.

"There's work to do in helping to build the financial confidence of women clients," Robinson says. "And the way to do that is by having conversations [that put] the investment discussion in the context of what you are trying to achieve."

The online Financial Comfort Zone Study has polled 18,000 Canadians thus far. The survey is meant to gain insight into the relationships among financial advice, financial well-being and overall life satisfaction in Canadian society. Canadians are polled monthly, and the number of survey participants will increase each month.

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