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Online Banking

August 2019

Considering Our Clients’ Top Financial Concerns

An in-depth look at recent survey results assessing our clients’ financial health and future.

Insurance Needs With news headlines and social media feeds blaring about trade wars and rising tariffs, you’re not alone if you’re worried about where the Canadian, BC and global economies are headed.

Many differences exist among Baby Boomers, Generation Xers, and Millennials. But one thing that brings all three generations together is a concern about their financial situations.

Your opinions matter

As part of our ongoing research, we run frequent surveys with our BlueShore online panel where we ask members to provide their opinions and insights on a range of financial topics related to their experience and the services we provide. This input is an important and valued contribution to our corporate decision-making and tactical plans.

The most recent panel survey was on clients’ Top Financial Concerns. The purpose of this survey was to get insight into client perceptions of health of the economy and their personal finances, as well as their key financial concerns at this time.

Economic anxiety

The recent BlueShore Financial survey* found about two-in-five respondents were concerned about the perceived weakening of the global, Canadian and BC economies. The upcoming October federal election is also looming large and is sure to add to the overall level of uncertainty.

There are certainly reasons to be nervous. Canada, the United States and Mexico reached a new trade deal in November 2018 to replace the North American Free Trade Agreement (NAFTA), but so far only Mexico has signed off on it creating continuing uncertainty.

Meanwhile, the U.S. and China have been hiking trade barriers and tariffs, actions that will slow trade and economic development. As well, their dispute over the activities of Huawei has ensnared the Canadian government, hurting our trade with China. In addition, Britain’s plan to leave the European Union on October 31 has added uncertainty and costs as companies and consumers are preparing for an uncertain future.

Looking at BC, Central 1 Credit Union’s Deputy Chief Economist, Bryan Yu, forecasts that global trade uncertainty will cause the province’s annual economic growth to slip to 2.2 per cent in 2019, the slowest pace since 2015.

“Economic growth is limited by the weak global trade environment, reduced consumer spending and the downturn of the forestry sector,” said Yu. The local forestry sector has experienced a sharp downfall after robust activity in early 2018. Fortunately, BC is buoyed by a strong labour market, growing population and strong building cycle.

*The survey was conducted from March 26 to April 15, 2019 with a total of 533 surveys completed. Panelists were asked questions about their financial health in 2018 and their financial concerns for 2019.

Most say their personal results are good

In our survey, while clients had concerns about the economy, they were optimistic about their financial future. Most said that times are good for them and they have experienced growth and stability in their own personal and business finances.

Overall, the top financial concern by a significant margin was the cost of living, at 44%. Many respondents were also concerned about their retirement income (28%), the real estate market (27%), the Canadian dollar (26%) and interest rates (25%).

In terms of business financial concerns, the Canadian economy (34%) and taxes (34%) took top spots, followed by current income/salary level (33%).

Understandably, the picture is somewhat different for Millennials – those now 19 to 39. A higher proportion of Millennials cited the cost of living as their top concern (70% Millennials vs. 39% of those over 40), the real-estate market ranked next (41% vs. 24%), and their current income or salary was third (36% vs. 12%). For Millennial business owners, the Canadian dollar (50%) took top place.

Addressing the concerns

We know that clients’ financial concerns will affect their saving, investing and spending behaviours this year. Many people said they are planning to consult with a financial advisor (32%), while paying down their debt (31%), and increasing their savings, both long-term/retirement (27%) and short-term/emergency (24%).

For Millennials, it's more a case of living in the now. A higher proportion of Millennials are planning to increase their short-term savings (51% of Millennials compared with 19% of those over 40), pay down more debt (48% vs. 28%), increase long-term savings (44% vs. 23%) and increase their income (38% vs. 13%).

The widespread financial concerns will have an impact on many parts of the economy. Clients say because of their fears they are postponing, changing or cancelling plans for vacations or travel (77%) and large purchases, such as a car or boat (66%).

At any age, trying to meet the competing demands of both short- and long-term financial goals can be challenging. Fortunately, there is still time for all three generations to develop healthy money management habits and improve their finances.

Focusing on the basics may help Baby Boomers, Gen Xers, and Millennials address their financial concerns. Creating and sticking to a budget can make it easier to understand exactly how much money is needed for fixed/discretionary expenses as well as help keep track of debt. A budget may also be a useful tool for learning how to prioritize and save for financial goals, including adding to an emergency savings account and retirement savings.

Coping with high real estate costs

The cost of BC real estate continues to be a hot button issue as taxation measures and government interventions from 2018 have slowed down market activity considerably and created a softening in average sale prices.

So what will the rest of the year hold? A further sales slowdown, a plateau, or the beginning of a recovery? No one knows for certain, but our clients are definitely being more cautious with their housing plans.

Results from our survey indicate 67% of respondents plan to sell real estate investments. The real estate market may also take a hit; 60% of those who had planned to invest in real estate, purchase a home, or downsize their primary residence are postponing, changing or cancelling those plans.

Housing affordability for Millennials will remain a serious concern for years to come. A recent study, Straddling the Gap, says saving for a home now requires a long-term commitment. It takes the average Millennial 13 years to save a 20% down payment on an average-priced home, while in 1976 it took their parents just five years.

Working with an advisor can help grow savings and get potential home buyers into the market sooner. A study by CIRANO, a Montreal-based economic research agency, showed that receiving regular advice helped savers make better decisions and reach their goals more quickly.

Shifting labour landscape

Seeing a strong labour market, but feeling concerns about the future, 57% of survey respondents said they plan to make a career change and 50% plan to start a business. The good news is that 58% of business owners plan to expand. This holds true for both Millennials, at 64%, and older generations at 57%.

Individual investing needs

The Investment Funds Institute of Canada says that over time advisors can help individuals become more financially literate and make better investment decisions. This is especially important for retirement planning as most people do not have defined benefit pensions and must rely on their own savings and investments to meet their needs later in life.

Age plays a factor in how clients look at the markets. 18% of survey respondents said they plan to shift more money into fixed income investments. Roughly 8% said they plan to move money out of the stock market, while an equivalent number (7%) plan to go in the opposite direction and expand their equity investments. This is more pronounced among Millennials, with 19% planning to increase their market investments to take advantage of their longer time horizons.

BlueShore’s advisors take each individual’s needs and risk profile into account when recommending strategies and investments and they are not required to sell proprietary products.

The role of your financial advisor

Financial advice only has value when it’s uniquely tailored to each individual’s circumstances. So whether you’re a Millennial looking for budgeting and saving strategies, a business owner looking for ways to minimize the tax bite, or a Boomer focused on retirement savings and income needs, your financial advice is a partner you can call on at any time.

BlueShore’s panel survey revealed that the vast majority of people have confidence in their financial advisor, with 55% either very or extremely confident and 34% moderately confident. Only 2% said they are not-at-all confident. These numbers compare well with our Client Experience Survey, which indicates that 83% of our client’s surveyed agree that BlueShore Financial improves their financial well-being.

Your voice matters

Join our Online Research Panel and you could win $1,000 cash or $1,000 for your favourite charity. The BlueShore Financial Online Research Panel gives you the opportunity to voice your opinion on various topics ranging from financial services to emerging financial trends. Every time you participate in a Panel survey, you will be entered to win one of six cash prizes of $50! Simply click here and complete a brief questionnaire. Once you have confirmed your participation, you’re registered! Learn more.

The course ahead

BlueShore’s highly qualified and knowledgeable advisors can help both personal and business clients chart a smooth course through what could be a challenging period. They can help set up a solid financial framework to support you whatever your goals might be. Talk to us today.

The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any insurance or other securities.

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