CSA report shows rising investment fraud incidents for younger cohort
Young Canadians want to forge their own path in the world and perhaps do things differently to how their parents did. But is their DIY attitude to investing putting their money at risk?
A new report from the Canadian Securities Administrators shows that younger investors, along with those with portfolios of less than $100K are less likely to be working with a financial advisor than older cohorts.
Across all adults there has been a 10 percentage point drop in the percentage who work with an advisor (61%) since 2016 (71%) with eight of those lost points in the last four years. The largest drop is among the under 45s and lower-portfolio-value investors.
Meanwhile, 45% of investors say they have a self-directed account, rising to 57% among those aged 18-24, 55% among 25-34s, and 53% of 35-44s. Older cohorts with DIY accounts are below the average with 42% of 45-54s, 35% of 55-64s, and 33% of those 65+. Men (52%) are more likely than women (36%) to have a self-directed account. Three in ten accounts were opened in the last two years.
Investment fraud risk
Investment fraud is on the rise though and it’s younger investors who are high-risk. The research reveals a decline in investment fraud for over 55s since 2006, it has doubled for 25-44s and more surged for 18-24s according to the data.
Adding to risky behaviour among Canadian investors, the share of respondents who use social media for investment information has increased by 18 percentage points since 2020 to 53%, rising to 82% for 18-24s who favour YouTube, Instagram, and TikTok.
There has also been a surge in the share of poll participants who say they have seen investment opportunities on social media, with 46% of all age groups stating this, up 17 percentage points since 2020, and again this is more prevalent among the younger age groups.
A recent survey from TD found that Canadians aged 18 to 34 are more likely to be targeted on social media by fraudsters compared to older people, with 41% of these young adults saying they have been a target and one third admitting to having fallen for the scam.
"How Canadians research and manage their investments continues to change, with more investors seeking information from social media and turning to do-it-yourself investing," said Stan Magidson, CSA Chair and CEO of the Alberta Securities Commission. "Surveying investor behaviour on a regular basis allows the CSA and its member jurisdictions to enhance existing investor education tools and develop targeted new programs to help Canadians invest wisely and avoid fraud."
