The OSC has discovered some gaps despite a broad amount of knowledge among Canadian investors
Canadians have a high level of financial literacy but there are still significant gaps in what they know about investing.
As the old proverb says: ‘a little knowledge is a dangerous thing’ and for 30% of respondents to an Ontario Securities Commission poll, the knowledge they think they have exceeds the reality.
The share of respondents who underestimated their knowledge was 14%, including 12% of men and 17% of women.
More than 2,500 Canadians were asked 27 financial literacy questions to self-assess their investment knowledge with the average participant getting 53% correct.
Questions included OECD financial literacy questions with respondents averaging 68% correct, led by questions on compound interest, mortgage amortization, and inflation.
Other topics included core investing principles and concepts; investment costs; registered accounts including TFSA, RRSP, and RESP; and portfolio protection.
Perhaps out of necessity, self-directed investors answered the highest share of questions correctly (59%) compared to those using an advisor (52%) or a robo-advisor (49%).
The two areas where knowledge was weakest were investment costs (36%) and investor protections (44%), while knowledge of registered accounts was the highest (69%).
Gender and age gaps
The survey discovered that the gap between men and women was relatively small with men answering an average 56% of questions correctly compared to women’s 50% average.
Across age groups, correctly answered questions ranged from an average of 51% for 18–34-year-olds to 56% for over 55s, and the group in the middle falling roughly in between. The youngest cohort were most likely to overestimate their knowledge (38% vs 30% of 35-54s and 22% of over 55s.)
“This report helps us better understand the investing knowledge of Canadians,” said Tyler Fleming, Director of the Investor Office at the OSC. “Identifying the knowledge gaps helps us to refine our investor resources, outreach efforts, and our policy development.”
