Canadian investors remain highly vulnerable, amid low literacy rates, a lack of due diligence, and an increasing reliance on social media for investing insight, suggest the results of a survey conducted for the Canadian Securities Administrators (CSA).
The 2017 CSA Investor Index, which explores investor attitudes and behaviour, was published on Monday. Among other things, it finds that Canadian investors have weak investment knowledge and worrying research habits.
For example, just over half (51%) of investors failed the general investment knowledge test that was part of the survey.
Moreover, Canadian investors are increasingly relying on social media for their information about investing. According to the survey, 43% of respondents are using some form of social media for investment insights, up from 35% in 2012. In particular, 22% are getting information from Facebook, up from 16% in 2012, and 20% are getting information from YouTube, up from 14% in 2012.
The survey also finds that one of the securities regulators’ central messages to investors — the importance of checking registration — appears to be going largely unheeded. Just 29% of investors who use financial advisors say that they checked an advisor’s background, which is down from 38% in 2012. And only 4% said that they checked registration with their provincial regulator.
Despite these investment knowledge concerns, the survey finds that investors are increasingly optimistic about their own fortunes, with 53% saying that they are optimistic about achieving their investment targets over the next year, which is up from 39% in 2012.
“It’s encouraging news that Canadian investors are positive about their economic futures,” says Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers, in a statement. :No matter how well the economy or their investments are performing, it’s important that investors continue to understand their investments, know the risks involved and be aware of the red flags of investment fraud.”
The survey also finds that robo-advisors gaining popularity among Canadians, with 23% reporting that they are likely to use one if they open a new account or move an existing one. However, only 9% currently have an account with a robo-advisor, and only 16% are familiar with these services.
The research was carried out by Innovative Research Group, which interviewed 7,271 Canadian adults online between Aug. 28 and Oct. 2.
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