Affluent Investing: Incl Impact of COVID-19 - Canada - April 2020

OVERVIEW
What you need to know
Key issues covered in this Report
Definitions
Income
Glossary
EXECUTIVE SUMMARY
Impact of COVID-19 on investing
Some 4% of Canadians have at least a million in investments
Figure 1: Breakdown of Investments (excluding cryptocurrencies), January 2020
Around half of affluent investors own fixed income investments and stocks
Figure 2: Ownership of products/accounts, by level of investments, January 2020
Affluent women are less comfortable, what can the industry do?
Figure 3: General attitudes about investing, affluent man vs affluent women, January 2020
Younger are more socially conscious
Figure 4: General attitudes and behaviours about investing (select), 18-44s vs Over-45s, January 2020
Affluent women more likely to use robo-advisors 
What it means
THE IMPACT OF COVID-19 ON AFFLUENT INVESTING
Summary
Figure 5: Short, medium and longer term impact of COVID-19 on affluent investing, April 2020
Opportunities and Threats
A temporary flight to safer investments is inevitable...
…and the crisis will increase the popularity of ESG investing
An emphasis on community and mutual support
Figure 6: Vancity Facebook post, March 2020
Playing to their confidence as investors
Figure 7: Desjardins Online Brokerage mobile ad, May 2020
Figure 8: Fisher Investments Canada online ad, May 2020
Market impact of COVID-19
Fewer in-person interactions as consumers move online
Mutual funds face flood of redemptions, some real estate funds halt redemptions
Shifts in consumer behaviour
Affluent investors more likely to keep their investments in Canada
How the crisis will affect key consumer segments
Women are more likely to cut spending drastically
Opportunity for robo-advisors to target affluent women
Younger affluent Canadians may be experiencing a cash surplus
How a COVID-19 recession will impact consumer finances
Unemployment is a concern as GDP drops
Economic update
Moving from 2019, perception of financial health was already softening
Figure 9: Perception of financial health, January/February 2015-20
COVID-19: Canadian context
THE MARKET – WHAT YOU NEED TO KNOW
Financial market impact of COVID-19
Affluent market segment perspective: doctors
New deferred annuities to provide greater income security for retirees
Deferred sales charges to be banned
Trailer fees also on the “ban radar”
WHAT’S NEW?
Financial market impact of COVID-19
Figure 10: Worry about impact of COVID-19 on one’s lifestyle, March 26 – April 1, 2020
Affluent market segment perspective: doctors
Background
Doctors vs other affluent clients
Competition
New deferred annuities to provide greater income security for retirees
Deferred sales charges to be banned
Trailer fees also on the “ban radar”
KEY PLAYERS – WHAT YOU NEED TO KNOW
Partnerships and acquisitions
Legal and regulatory news
Marketing campaigns
INDUSTRY DEVELOPMENTS AND INNOVATIONS
Subsidiary of Purpose Financial buying Wealthsimple’s financial-advisor business
Hub Financial partners with Nest Wealth 
Discount brokerages hit with class-action lawsuit 
Handing back control of PACE credit union to members
Taking over stock market trading supervision in Canada 
Mutual funds face flood of redemptions, some real estate funds halt redemptions
MARKETING CAMPAIGNS
Manulife puts disciplined advice at the forefront
Figure 11: Manulife Investment Management - The Farm, February 2020
BMO breaks biases
Figure 12: BMO | Jane’s Story, March 2020
Ellevest (US)
Figure 13: Retirement in Real Life: Irene Buchman & Kayla Gluck, January 2019
THE CONSUMER – WHAT YOU NEED TO KNOW
Some 4% of Canadians have more than a million in investments
Around half of affluent investors own fixed income investments and stocks
Retail banks most favoured for investing
Majority of investors are risk averse, less so among affluent
Affluent women more likely to outsource investment decision making
Affluent women are less comfortable interacting with the investment industry
AFFLUENCE & PRODUCT OWNERSHIP
Some 4% of Canadians have at least a million in investments
Figure 14: Breakdown of Investments (excluding cryptocurrencies), January 2020
Figure 15: “Who are the affluent?” by age and gender, January 2020
Some 11% have a net worth of more than a million
Figure 16: Breakdown of net worth (including real estate and pensions), January 2020
Half of Canadians have a TFSA, majority have a savings account
Figure 17: Ownership of products/accounts, January 2020
Around half of affluent investors own fixed income investments and stocks
Figure 18: Ownership of products/accounts, by level of investments, January 2020
Affluent men have a higher ownership of stocks and ETFs
Figure 19: Ownership of products/accounts (select), affluent men vs affluent women, January 2020
TYPE OF FINANCIAL INSTITUTION USED
Retail banks most favoured for investing
Figure 20: Type of FI used for investing, January 2020
Those with $500k-$1 million in investments are key clients for independent investment companies 
…while millionaires are key clients for bank/credit union owned wealth management subsidiaries
Figure 21: Type of FI used for investing, by amount of investments, January 2020
Discount brokerage use trends higher among affluent, Chinese Canadians and men
INVESTING ACTIVITIES
Around half have performed one of the selected investing activities
Figure 22: Investing activities performed, January 2020
Passive investing and using investment software holds more appeal to affluent men
Figure 23: Investing activities performed (select), by amount of investments, January 2020
Estate planning and charitable giving are more important for affluent
Affluent women more likely to use robo-advisors and create a financial plan
Figure 24: Investing activities performed, (Select), affluent men vs affluent women, January 2020
ATTITUDES TOWARDS INVESTING
Majority find investing complicated and interesting
Figure 25: Attitudes towards investing, January 2020
Majority of investors are risk averse, relatively less among affluent
Figure 26: Attitudes towards investing (% agree), affluent vs overall, January 2020
Majority feel that investing in property is safer than the stock market
Affluent women are more risk averse
FINANCIAL ADVICE
Awareness about financial advice is fairly high
Figure 27: Attitudes related to financial advice, January 2020
Younger consumers are strongly open to digital communication with their financial advisor
Figure 28: Attitudes related to financial advice (select), 18-44s vs over-45s, January 2020
Affluent women more likely to outsource investment decision making to a financial advisor
Figure 29: Attitudes related to financial advice (select), affluent vs overall, January 2020
INVESTING STRATEGIES & GENERAL ATTITUDES
Only one in four comfortable interacting with the investment industry
Figure 30: General attitudes and behaviours about investing, January 2020
Younger are more socially conscious
Figure 31: General attitudes and behaviours about investing (select), 18-44s vs over-45s, January 2020
Affluent women are less comfortable, what can the industry do?
Figure 32: General attitudes about investing (select), affluent men vs affluent women, January 2020
Affluent investors more likely to keep their investments in Canada
Figure 33: General attitudes and behaviours about investing (select), affluent vs overall, January 2020
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Abbreviations and terms