6th edition of annual study shows how Canadians are feeling in a troubled economic environment
Canadian financial confidence continued its multi-year decline in 2023, according to the IG Wealth Management Financial Confidence Index. That index fell significantly last year — from a score of 57 in 2021 to 51 in 2022 — and fell again down to 50 in 2023.
The index is informed by 10 survey questions, asked of Canadians by IG in partnership with Ipsos Canada. It found that Canadians’ financial confidence was declining due to concerns over where the economy is headed next year. It also found growing concerns about the ability of authorities to effectively manage what might be a slowing economy.
The index is based around what IG calls “the four pillars of financial confidence”: personal financial outlook, planning and literacy, trust in the economy and current financial situation.
Three of those four pillars remained steady in the 2023 survey, but trust in the economy fell to a score of 40 from 43 the year before.
60% of respondents say they believe Canada is already in a recession, 68% believe that Canada is heading into recession in 2024. 65% of respondents believe that governments and other institutions are not doing enough to address fiscal issues facing Canada.
“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,” said Damon Murchison, President & CEO, IG Wealth Management in a press release announcing the survey results. “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.”
Despite recent data showing a slowdown in inflation, 49% of respondents raised concerns that inflation will continue to rise in 2024. 20% said the ability to maintain their current standard of living was one of their biggest concerns in 2024. 62% said they were concerned about housing affordability and 39% said they were concerned about food costs. 56% said they were saving less for retirement due to a higher cost of living.
There was one bright spot in the survey results. Canadians working with a financial advisor were 29% more confident overall than those without an advisor. 90% of respondents who work with an advisor were confident their financial plan could withstand economic downturns.
“Given Canadians’ apprehension about the future and the rising cost of living, the value of advice has never been more important,” Murchison said. “Working with a financial professional who can create or revisit a holistic financial plan can help to ensure your financial well-being is protected today and well insulated for the future.”
