Canadians easy targets for fraudsters: survey

Canadians are too lax when it comes to fraud awareness and financial literacy, says the 2012 CSA Investor Index.

The survey found 30% of Canadians have been approached by fraudsters, but that only 29% of these investors have reported the incidents to the authorities.

It also shows Canadians’ financial literacy is dangerously low, with 40% failing a general investment knowledge test and only 57% confident in their investment decisions.

Read: Financial literacy key to prosperity

More troubling, most Canadians have unrealistic expectations of market returns. When asked what they think the annual rate of return on the average investment portfolio is currently, only 12% gave a realistic estimate.

“Understanding key investment concepts, such as the relationship between risk and return, [is crucial],” says Rice.

Read: From asset allocation to risk allocation

The survey also posed a series of questions to determine how many people use blogs and social media tools as a source of investment information. It found over one-third of Canadians have used at least one platform to look up products and strategies.

Read: Social media: Where businesses build and defend reputation

Advisors are still the go-to source, however, with most people saying face-to-face meetings are the most helpful when making decisions about their portfolios.

Read: Advisors expected to add more value

Other key findings:

• Nearly half of Canadians (49%) say they have a financial advisor, up from 46% in 2009 and 42% in 2006. More than half, though, (60%) haven’t ever completed any form of background check on their advisors.
• About a third (31%) say they have a formal written financial plan, up from 25% in 2009. But they’re reviewing it less frequently; only 78% have done so say, down from 83% in 2009.

Read: Don’t be fooled by the next Madoff

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.