crowd divided / Orbon Alija

Canadian investors barely received a passing grade on their financial literacy, according to the results of a survey released Wednesday by the Ontario Securities Commission.

The more than 2,500 investors surveyed were only able to answer 53% of 27 investment-related questions correctly, on average. DIY investors scored the highest (59% correct on average), while those working with financial advisors scored 52% and those working with robo-advisors scored 49%.

The topic for which all investors gave the most correct answers was registered accounts (69% correct on average), while the topic with the fewest correct answers was investment costs (36%). Previous research from the OSC has found that many investors don’t understand what they’re paying based on their annual fee reports.

Three in 10 investors were overconfident about their investment knowledge, with 29% underperforming their expected level of investment knowledge. Men, investors aged 18-34 and robo-advisor clients tended to exhibit the most overconfidence.

However, some investors’ self-assessed financial literacy decreased after completing the survey. Thirty-one percent of participants lowered their estimate after answering the 27 questions, with investors aged 18-34 most likely to do, but 52% did not.

The report called this the “de-biasing” effect, noting that giving an investor practical examples of knowledge gaps can be helpful in bringing expectations in line with reality.

Meanwhile, 14% of investors overperformed their expected knowledge. Women, those aged 55+ and clients of human financial advisors tended to exhibit the most underconfidence.

Despite these results, Canada has one of the highest financial literacy rates in the world, scoring 68% on a subset of questions the OECD uses to gauge financial comprehension. That compares to a range of 55% to 75% in countries such as Australia, Germany, Israel and the United Kingdom.

The survey was designed by the OSC’s Investor Office and conducted online by Innovative Research Group between Sept. 21 and Oct. 4, 2021. A margin of error cannot be assigned to online surveys.