Self-directed investors are the most financially savvy

The topic for which all investors gave the most correct answers was registered accounts (69% correct answers on average), while the topic for which there were the fewest correct answers was investment costs ( 36%). Previous OSC research revealed that many investors do not understand what they are paying based on their annual fee reports.

Three in ten investors were overconfident about their investment knowledge, and 29% did not meet the expected level of investment knowledge. Males, investors aged 18-34, and clients of robo-advisors tended to be the most trusted.

Some investors’ self-rated financial knowledge declined after completing the survey. Nearly a third of participants (31%) lowered their estimate after answering the 27 questions. Investors aged 18-34 were the most likely to correct their estimate, but 52% did not.

The report called this the “de-biasing” effect, noting that giving an investor practical examples of knowledge gaps can be helpful in matching expectations to reality.

At the same time, 14% of investors exceeded their knowledge expectations. Women, people aged 55 and over, and clients of advisors tended to show a lack of confidence in their knowledge.

Despite these results, Canada has one of the highest rates of financial literacy in the world, scoring 68% on a subset of questions the OECD uses to assess financial literacy. In comparison, countries such as Australia, Germany, Israel and the UK score between 55% and 75%.

The survey was designed by the OSC Investor Office and conducted online by Innovative Research Group between September 21 and October 4, 2021. A margin of error cannot be attributed to online surveys.

Leave a Comment

Your email address will not be published.