WATERLOO, ON, Jan. 8, 2014 /CNW/ - Younger Canadians feel that they are
not getting ahead financially and they shouldn't count on an
inheritance according to the Manulife Financial's latest Investor
Sentiment Index. The Index also showed that despite robust capital
markets at pre-financial crisis levels, Canadians' overall investor
sentiment remains mired in the recession.
Almost half (46 per cent) of Canadians aged 25-34 say they are worse off
financially than they were two years ago while 40 per cent of those
aged 35-44 say they are worse off financially. Despite that, 62 per
cent of Canadians aged 25-34, say they're optimistic that they will be
in a better financial position two years from now, while 60 per cent of
those aged 35-44 say they remain optimistic for the future.
The latest survey results also show that it isn't likely that younger
Canadians - part of a generation which has traditionally been
challenged by a difficult job market and underemployment - will receive
much help in the form of future inheritance. Nearly half of Canadians
(43 per cent) report that they haven't given any thought to how much
cash or assets they'll leave to their heirs. As many as 13 per cent say
they plan to leave nothing, while more than one in four (29 per cent)
say they will leave less than $100,000. Only two per cent of Canadians
report that they will leave an inheritance of $1 million or more.
"The reality is that young Canadians will be the first generation to not
be better off than their parents. Many Canadians haven't even thought
about what cash or assets they will leave to their children," said Paul
Lorentz, Executive Vice-President, Retail Markets. "Young Canadians
might need some of the financial discipline of their great
grandparents, those who lived through the Depression, coupled with
modern financial solutions."
Investor Sentiment Index dips despite continuing market recovery
Overall, investor confidence in Canada was down slightly since May of
2013 as the Investor Sentiment Index dipped by one point, to +21. The
Index is up one point from a year ago when it was +20 and it remains
substantially higher than it was at the start of the economic downturn
in 2008 (+5).
"In these latest results, we saw a marked change to a positive trend
we've been seeing for some time," said Mr. Lorentz. "Typically, the
Investor Sentiment Index follows the same general pattern as the
markets, but despite the gradual recovery there, the Index slipped
suggesting that Canadian investors still aren't finding much comfort in
more robust markets. Canadians are still wary."
Provincially, Alberta residents appear to be Canada's most confident
about investment and savings vehicles, posting an overall Investor
Sentiment Index score of +30, while Quebec posted the lowest score at
Maintaining current lifestyle no longer a priority for Canadians
Index results also point out that Canadian investors of all ages have
made one significant shift in their financial priorities for 2014.
Entering 2013, Canadians were focusing on paying down debt (top
priority: 31%) while still maintaining their current lifestyle (second
priority: 22%). Today, only 1% of Canadians indicate that maintaining
their current lifestyle is a financial priority - a drop of 21 percent.
Regardless of income or age, Canadians' top financial priority for 2014
is to pay down debt (29 per cent), followed by reducing spending (11
per cent), saving for retirement (9 per cent), saving for a rainy day
(8 per cent) and paying down a mortgage (8 per cent.)
"We're seeing that debt management, reducing spending and saving are,
more than ever, top of mind for Canadians but just as importantly, that
Canadians are also more aware of the financial choices they're making.
They're making good financial decisions to put their finances in order
for the future even knowing that they may not be able to maintain their
current lifestyle because of them," added Mr. Lorentz.
Advisors make significant impact
Four in ten Canadians report having a financial advisor which proves to
be one of the most significant influencers on Index score. The Investor
Sentiment Index score for individuals with an advisor is +27, while it
is +16 for those without an advisor.
"Clearly, having access to professional financial advice will help you
stay on track," added Mr. Lorentz. "We see time and again that having
an advisor is also the single most important positive influence on an
individual's peace of mind with their financial position now and in the
Canadians with an advisor are less likely to cite paying down debt as a
priority, but they are more likely to mention saving for retirement.
Those who work with an advisor are also significantly more likely to
feel that they are on track with their current financial goals (52 per
cent vs. 36 per cent) and they are more likely to say that they are in
a better financial position than they were two years ago.
About the Manulife Financial Investor Sentiment Index
The Manulife Financial Investor Sentiment Index is a semi-annual measure
of investors' views on a range of asset classes and savings and
investment vehicles, as well as their confidence in these areas. The
index is based on an online survey of 2,000 Canadians aged 25+ that was
conducted November 12-22 by Research House, an Environics Company. A
national probability sample of this size would have a margin of error
of +/-2.2 percentage points, 19 times out of 20.
About Manulife Financial
Manulife Financial is a leading Canada-based financial services group
with principal operations in Asia, Canada and the United States.
Clients look to Manulife for strong, reliable, trustworthy and
forward-thinking solutions for their most significant financial
decisions. Our international network of employees, agents and
distribution partners offers financial protection and wealth management
products and services to millions of clients. We also provide asset
management services to institutional customers. Funds under management
by Manulife Financial and its subsidiaries were C$575 billion (US$559
billion) as at September 30, 2013. The Company operates as Manulife
Financial in Canada and Asia and primarily as John Hancock in the
Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE,
and under '945' on the SEHK. Manulife Financial can be found on the
Internet at manulife.com.
SOURCE: Manulife Financial Corporation
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