New study shows optimism among Canadians who work with a financial advisor

Investors with a financial advisor are much more financially confident than those without one, despite economic uncertainty.

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Enlisting the help of a financial advisor can preserve optimism when the economy is uncertain, says a new study.

Since the aftermath of the pandemic, Canadians have been inundated with news about a slow economic recovery, soaring inflation, high interest rates and ongoing regional tension and conflict around the world. It’s not surprising then, that many Canadians have concerns about the state of the economy and where it may be heading in the coming year.

According to the sixth annual edition of IG Wealth Management’s Financial Confidence Index, the financial confidence of Canadians in 2023 continued to decline post-pandemic — currently standing at 50, down seven points from 2021 and one point from 2022. It demonstrates a continued lack of confidence in the health of the economy and an overall anxiety about the future when it comes to their personal financial situation.

The Index tracks and reports Canadians’ overall financial confidence based on 10 survey questions related to IG‘s four pillars of financial confidence: personal financial outlook, planning and literacy, trust in the economy and current financial situation.

Among other key findings of this year’s index:

• There is a significant decline in the pillar relating to Canadians’ trust in the economy, down from 43 to 40.

• Sixty per cent of respondents think Canada is currently in a recession, and more than two-thirds believe Canada will heading into a recession in 2024.

• Two-thirds believe that governments and other institutions are not doing enough to address the fiscal concerns facing the country.

Additionally, and not surprisingly, the cost of living is of significant concern among Canadians. Half are concerned inflation will continue to rise in the year ahead and almost 20% are worried about maintaining their current standard of living in 2024. When it comes to basic needs, 62% of Canadians expressed concern about housing affordability, 39% about the soaring cost of food and 56% about their ability to save for retirement.

“While Canadians are feeling relatively stable with their current personal financial situation, there are significant concerns about where things could be headed in the year ahead and in our ability to successfully navigate this uncertainty,” says Damon Murchison, President and CEO of IG Wealth Management. “This can, in part, be attributed to the apprehension felt over the last year about the cost of living, rising interest rates and intensifying global tensions.”

Although many have concerns about the future, the study did show there was optimism among those who work with a financial advisor: their financial confidence is 29% higher than those who don’t have an advisor. Of those with a financial advisor, nine in 10 believe their financial plan can withstand economic downturns.

“Given Canadians’ apprehension about the future and the rising cost of living, the value of advice has never been more important,” says Mr. Murchison. “Working with a financial professional who can create or revisit a holistic financial plan can help to ensure your fiscal well-being is protected today and well insulated for the future.”

The IG Financial Confidence Index is part of IG’s community program, IG Empower Your Tomorrow, which is dedicated to building financial confidence among Canadians, especially those most at risk. Visit IG Empower Your Tomorrow to learn about the various initiatives supported by IG and speak to a local IG Wealth Management Advisor today to increase your financial confidence: Find an Advisor | IG Wealth Management.

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