With millennials entering the global workforce and baby-boomers on the cusp of retiring from it, the world is experiencing a substantial transition; one accompanied by rapidly changing technology and social norms.
It can become easy to focus on perceived generational differences instead of similarities with many generations of people interacting and working alongside each other. This is especially true with finances and financial planning.
Despite what media headlines might say, financial literacy – or the lack thereof – is not exclusive to one group of people. General unease with the intricacies of financial planning coupled with the highly complex emotions surrounding money means many Canadians of all ages are reluctant and/or unsure how to seek professional financial advice.
According to a September – October 2018 survey done by the Financial Planning Standards Council, “one-in-three Canadians fail the [financial] stress test, meaning they somewhat or strongly doubt their bank account can withstand a financial emergency… [and] nearly three-in-ten are not confident they will achieve their financial life goals.”
The same survey found “two-thirds of Canadians have not engaged the services of a professional financial planner.” Many Canadians clearly share a reluctance to seek professional financial advice and this reluctance is having a serious impact on their sense of financial stability and well-being.
The survey listed the following reasons for why Canadians avoid seeking financial advice:
- I don’t have a big enough portfolio
- I do not know who to trust
- It is too confusing and overwhelming for me to consider at this time
- I’m embarrassed by my financial situation
- I do not know where to find one
Although those who reported having never sought professional financial planning help were predominantly Gen X and Gen Y (18 – 44), a lack of financial know-how is not exclusive to younger generations.
50% of the respondents who had not sought financial advice stated not having a big enough portfolio as their reason why. This misconception was significantly more of a concern for individuals 45 years and older.
Remarkably, this tells us that from millennials to baby boomers, a major reason why Canadians are avoiding seeking financial advice is because of the misconception that they don’t have enough money to warrant it.
We only need to look at the reasons listed above to know guilt, shame and mistrust are emotions with a profound impact on our ability to make healthy financial decisions. Moreover, the way these emotions impact us can differ depending on social demographics.
For example, the survey found although significantly more women than men listed feeling too confused and overwhelmed to consider seeking financial advice, significantly more women than men also felt confident in their ability to achieve their financial goals and withstand a financial emergency. Likewise, significantly more people listed being too embarrassed by their financial situation to seek help if they made less than $40,000 annually.
The take away is: regardless of age, gender or income, many Canadians are stressed about their finances to the extent that it impacts their ability to secure their financial well-being. A good financial advisor will be understanding of the unique challenges faced by different generations and will craft a personalized plan based on his or her client’s lifestyle, timeline and goals.
If a fear of judgement is preventing you from seeking financial advice, you are not alone. Advisors understand the emotions experienced by investors and should take care to meet each person where they are today.
Connect with us to learn how you can start working towards securing your financial well-being.