A big difference exists between what investors know, and what they do. That’s a common theme emerging from a number of surveys released this fall tracking the investing and financial planning behaviour of Canadians.

Investors Group Inc. , the Ca-nadian Securities Ad-ministrators, Desjardins Sécurité Financier and Statistics Canada each recently released reports gauging investors’ intentions and actions.

When it comes to investing for retirement, a survey released in November by Winnipeg-based Investors Group shows confidence is strong in markets but slipping in real estate. Of the 2,170 people surveyed, the number of non-retired Canadians who believe their real estate assets would grow in value over the next 10 years by more than their other investments will grow fell to 51% from 65% a year earlier.

The decline in emphasis on real estate is a good thing for retirement planning, the report says, as residential real estate values have not increased as fast as the S&P/TSX composite index. From 1995 to 2005, the average residential real estate price increased an average of slightly more than 5% a year, while the index has averaged 11% a year.

“Individuals are realizing the value of diversification of a portfolio,” says Aurele Courcelles, senior specialist, tax and estate planning, for Investors Group. “Don’t concentrate only on buying a big house and paying down the big house, but take the big picture and have a well-diversified portfolio.”

This shifting mindset is reflected in investors’ RRSP plans for this year. The Investors Group survey reports that: 8% plan to leave their RRSP contribution in cash; 43% plan to invest in the stock market via mutual funds; and 6% plan to invest directly in the stock market.

In contrast with the intention to depend more on the market is a further 29% of respondents who do not have money in a RRSP or a RRIF at all. Courcelles says the strain that family, job and health changes put on saving and budgeting is a main reason for this lack of saving, which comes at a cost.

“Not following through on the financial plan you have prepared is risking the eventual outcome,” says Courcelles. “If you have a plan and stick to the plan, then you should be able to achieve your long-term objective. Or, at least, you’re on the right path to the long-term objective. If you don’t even have a plan, how can you even know what that objective is, and how to reach that objective?”

Sandra Foster, president and founder of Toronto-based Headspring Consulting Group, says there are two main groups of people accounting for those who do not participate in retirement planning: “There’s a group of do-it-yourselfers, and then there’s a group at the other end that really doesn’t have money. They’re living paycheque to paycheque.”

Foster adds there are also individuals residing outside of urban areas who are comfortable living their retirement out on income from just the Canada Pension Plan and old-age security payments.

Another survey, the Investor Index released in October by the CSA, shows a gap between inves-tor knowledge and practice — one that can make Canadians vulnerable to unsuitable or illegitimate investment opportunities.

The CSA survey of 5,000 investors found that:

> 88% believe a financial plan is important, but 58% don’t have one;

> 92% believe it’s important to con-duct independent research be-fore investing, but 49% did not personally research their most recent investment and 22% invested immediately after hearing of the opportunity;

> 51% feel confident in their financial investment decisions, while 64% feel confident about where to go when checking out investment opportunities.

Yet, respondents to the CSA survey showed mixed performances on the topic of understanding fundamental concepts such as risk tolerance.

As far as motivating investors to apply what they know, Foster says, nothing works like peer influence. Being a member of the baby-boom generation has the potential to make financial planning seem relevant to many individuals.

“I think one of the things that is going to help is baby boomers are starting to retire,” Foster says. “There are 20 years of people who identify with being a baby boomer, so maybe they will start to identify with each other and think, ‘Oh, I’m a baby boomer, too. Maybe I should start to plan for this.’ It becomes more personal.”

@page_break@Still another survey, the fifth annual survey on retirement released in November by Lévis, Que.-based Desjardins, has found that timing financial decisions is a challenge.

Drawing from the responses of 1,600 people, the Desjardins survey found that Canadians are sophisticated and forward-thinking in their approach to retirement saving and planning, but simply start too late.

The study found that:

> 35% of workers and partial retirees didn’t seriously start saving for retirement until they were older than 40;

> Half of workers and partial retirees over age 40 would like to retire between the ages of 56 and 65, while 34% of workers and partial retirees would like to retire between the ages of 40 to 55;

> 69% of workers feel it is important to consult with a financial advisor before retiring, but only 53% have actually done so.

The Desjardins survey found those who began saving before they reached age 30 were couples with children and those with savings and investments of more than $100,000. There was a greater proportion of people who left saving until they reached age 50. These tended to be pre-retirees, those with income between $20,000 and $30,000, those with savings and investments between $10,000 and $25,000, part-time workers or those who live alone without children.

Even with the low numbers of people actively planning for retirement, a Statistics Canada report released in November says RRSP activity is growing.

The amount of RRSP contributions increased in 2005 for the third year in a row, while the number of contributors rose to its highest level in four years. Contributions that year totalled $30.6 billion, the highest total ever. That number, however, represents only about 7% of the total room available to eligible tax filers; out of the 86% of tax filers who were eligible to contribute in 2005, only 31% did so. IE