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Savings and Investments - Canada - January 2015

Published By :

Mintel

Published Date : Jan 2015

Category :

Banking

No. of Pages : 238 Pages

Devising innovative incentive schemes is the key to encouraging product consolidation and achieving the Holy Grail of increasing customer wallet share in the savings and investments marketplace.

Introduction

Excluded
Abbreviations
Glossary
Active management
Annuities
Atlantic Provinces
Canada Pension Plan
Decumulation
Dollar cost averaging
Deferred Profit Sharing Plan (DPSP)
Equities
Exchange-traded funds
Guaranteed Investment Certificate
Housing starts
Index fund
Life Income Fund
Management expense ratio
Old Age Security
Passive management
Registered Retirement Income Fund (RRIF)
Registered Retirement Savings Plan (RRSP)
Tax-Free Savings Account (TFSA)

Executive Summary

The market
Market factors
IMF expects the Canadian economy to remain solid, but many risks remain
Interest rates, inflation and market volatility
Outlook on the real estate and housing market
British Columbians have the highest net worth
Household debt in Canada
Population count and growth in Canada
Companies, brands and innovation
The consumer
Half of Canadians have a TFSA and/or RRSP
Figure 1: Ownership of savings and investment products, September 2014
TD and RBC are the top two choices for savings and investment products
Figure 2: Choice of financial institution for savings and investments, September 2014
Paying down credit card debt is the number one financial priority
Figure 3: Financial priorities over the next 12 months, September 2014
Younger Canadians relatively more open to product consolidation but also relatively more likely to switch their FI
Figure 4: Attitudes towards savings and investments, September 2014
What we think

Issues and Insights

Strategies to encourage product consolidation
The facts
The implications
Successful customer acquisition through better alignment of marketing strategies with customer choice factors
The facts
The implications
Helping financially less prepared groups meet their financial priorities
The facts
The implications
Understanding the distinct financial attitudes of Chinese Canadians
The facts
The implications

Trend Application

Trend: Old Gold
Trend: Life Hacking
Trend: Generation Next

Market Drivers

Key points
Economic overview
IMF expects the Canadian economy to remain solid, but many risks remain
Figure 5: Canada’s GDP, by quarter, Q1 2008-Q1 2014
Figure 6: Household disposable incomes and savings in Canada, by quarter, Q1 2008-Q1 2014
Figure 7: Canada’s unemployment rate, by gender, 2008-14
Interest rates, inflation and market volatility
Figure 8: Inflation rates in Canada, 2004-14
Outlook on the real estate and housing market
British Columbians have the highest net worth
Figure 9: Canada median net worth, by province, 2012
Household debt in Canada
Demographic overview
Population count and growth in Canada
Figure 10: Share of population of Canada, by territory/province, 2014
Canada’s population is expected to age in the coming years
Figure 11: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
Figure 12: Projected trends in the age structure of the Canada population, 2014-19
Canadian mutual fund fees
Decumulation and longevity risk
Financial markets performance

Strengths and Weaknesses

Strengths
Weaknesses

Who’s Innovating?

Key points
TD Bank app helps customers pinch pennies
Money transfer through social media
Toronto start-up Wealthsimple offers “really boring, long-term” way to accumulate wealth

Market Sizes

Key points
RRSP/RRIF/LIRA/DPSP
TFSA
Exchange-traded funds
Mutual funds
Stocks, bonds and deposits in financial institutions
Segregated funds

Companies and Products

Bank of Montreal (BMO)
Overview and company information
Recent activity
CI Financial
Overview and company information
Recent activity
Tangerine Bank (formerly ING Direct)
Overview and company information
Recent activity
BlackRock Asset Management Canada
Overview and company information
Recent activity
Fidelity Investments Canada
Overview and company information
Recent activity
Scotiabank
Overview and company information
Recent activity

Brand Communication and Promotion

Key points
BMO is the most active direct mailer for savings and investments
Figure 13: Direct mail volume related to savings and investments, December 2013-December 2014
Featured campaigns from Mintel Comperemedia
TD Mutual Funds: Learn to invest with confidence
Power Savings Account from Scotiabank
MarketSmart GICs from RBC

The Consumer – Ownership of Savings and Investment Products

Key points
Half of Canadians have a TFSA and/or RRSP
Figure 14: Ownership of savings and investment products, September 2014
Broad trends
Product ownership peaks among over-55s
Figure 15: Ownership of savings and investment products, by age, September 2014
Trends by product
Repertoire analysis
More than a third of Canadians have five or more savings/investment products
Figure 16: Repertoire analysis of savings and investment products, September 2014

The Consumer – Choice of Financial Institutions

Key points
TD and RBC are the top two choices for savings and investment products
Figure 17: Choice of financial institution for savings and investments, September 2014
Tangerine customers have significantly higher product ownership rates compared to Desjardins customers
Figure 18: Comparing ownership of savings and investment products among customers of Desjardins and Tangerine, September 2014

The Consumer – Choice Factors

Key points
Fees rank as the number one choice factor
Figure 19: Choice factors for choosing a financial institution for savings and investments, September 2014
Around eight in 10 consider reputation of their financial institution when choosing one for their savings and investments
Figure 20: Choice factors relating to reputation, September 2014
For about two thirds of Canadians, consolidation of products is a choice factor
Figure 21: Choice factors related to convenience, September 2014

The Consumer – Consumer Confidence and Opinions About the Economy

Key points
Summary of consumer confidence
Figure 22: Consumer confidence and opinions about the economy, September 2014
Consumers somewhat pessimistic about their financial outlook
Figure 23: Consumer confidence related to personal finances, September 2014
Mixed views on the housing market
Figure 24: Consumer confidence related to the housing market, September 2014
Less than a third of Canadians would consider moving from their province for economic reasons
Figure 25: Other consumer confidence attitudes, September 2014

The Consumer – Financial Priorities

Key points
Summary of financial priorities
Figure 26: Financial priorities over the next 12 months, September 2014
Paying down credit card debt is the number one priority
Figure 27: Priorities related to debt repayment, September 2014
Improving and/or maintaining a credit score is most important for young Canadians
Figure 28: Other financial priorities, September 2014
How Quebecers differ on financial priorities
Figure 29: Significant differences in financial priorities between Quebecers and other Canadians, September 2014
Men are more interested in short-term financial trading
Figure 30: Significant differences in financial priorities, by gender, September 2014

The Consumer – Attitudes towards Savings and Investments

Key points
Summary of attitudes
Figure 31: Attitudes towards savings and investments, September 2014
Younger Canadians relatively more open to product consolidation but also relatively more likely to switch their FI
Figure 32: Agreement with statements about consolidation and switching intentions, by age, September 2014
Middle-aged Canadians less trustful of financial advisers
Figure 33: Agreement with statements about satisfaction with financial institutions and preference for banks vs credit unions, by age, September 2014
Women have a generally lower risk tolerance
Figure 34: Agreement with statements about risk tolerance, by gender, September 2014
Older Canadians are more aware of fees
Figure 35: Agreement with statements about savings habits and awareness, by age, September 2014

The Consumer – Chinese Canadians and Savings and Investments

Key points
Chinese Canadians have a higher ownership of most savings and investment products
Figure 36: Ownership of savings and investment products, Chinese Canadians compared to Whites/Caucasians, September 2014
Paying down debt is a much lower priority for Chinese Canadians
Figure 37: Financial priorities: Chinese Canadians vs Whites/Caucasians, September 2014
Chinese Canadians have a higher investment risk tolerance relative to Whites/Caucasians
Figure 38: Attitudes towards savings and investments, Chinese Canadians compared to Whites/Caucasians, September 2014

The Consumer – Target Groups

Key points
Five target groups
Figure 39: Target groups, September 2014
Loyalists (24%)
Dissatisfied (20%)
Risk Takers (18%)
Risk-averse (19%)
Disciplined Savers (19%)

Appendix – The Consumer – Ownership of Savings and Investment Products

Figure 40: Ownership of savings and investment products, September 2014
Figure 41: Most popular ownership of savings and investment products, by demographics, September 2014
Figure 42: Next most popular ownership of savings and investment products, by demographics, September 2014
Figure 43: Ownership of savings and investment products, by most popular choice of financial institution, September 2014
Figure 44: Ownership of savings and investment products, by next most popular choice of financial institution, September 2014
Repertoire analysis
Figure 45: Repertoire of ownership of savings and investment products, September 2014
Figure 46: Repertoire of ownership of savings and investment products, by demographics, September 2014
Figure 47: Ownership of savings and investment products, by repertoire of ownership of savings and investment products, September 2014

Appendix – The Consumer – Choice of Financial Institutions

Figure 48: Choice of financial institution, September 2014
Figure 49: Most popular choice of financial institution, by demographics, September 2014
Figure 50: Next most popular choice of financial institution, by demographics, September 2014

Appendix – The Consumer – Choice Factors

Figure 51: Choice factors when choosing financial institution, September 2014
Figure 52: Choice factors when choosing financial institution – No fee/low fees on banking accounts, by demographics, September 2014
Figure 53: Choice factors when choosing financial institution – Reputation of provider, by demographics, September 2014
Figure 54: Choice factors when choosing financial institution – No minimum balance requirement for no fees, by demographics, September 2014
Figure 55: Choice factors when choosing financial institution – Branch customer service reputation, by demographics, September 2014
Figure 56: Choice factors when choosing financial institution – Having a number of branches in convenient locations, by demographics, September 2014
Figure 57: Choice factors when choosing financial institution – Interest rate is higher than other financial institutions, by demographics, September 2014
Figure 58: Choice factors when choosing financial institution – Variety of banking products available, by demographics, September 2014
Figure 59: Choice factors when choosing financial institution – Having other banking products with the same financial institution, by demographics, September 2014
Figure 60: Choice factors when choosing financial institution – Mobile banking capabilities, by demographics, September 2014
Figure 61: Choice factors when choosing financial institution – Recommended by family/friends, by demographics, September 2014
Figure 62: Choice factors when choosing financial institution – Level of community involvement of the financial institution, by demographics, September 2014
Figure 63: Choice factors when choosing financial institution – Introductory gift for new customers offered, by demographics, September 2014
Figure 64: Choice factors when choosing financial institution, by most popular choice of financial institution, September 2014
Figure 65: Choice factors when choosing financial institution, by next most popular choice of financial institution, September 2014

Appendix – The Consumer – Consumer Confidence and Opinions about the Economy

Figure 66: Consumer confidence, September 2014
Figure 67: Agreement with the statements ‘I am more cautious with my money than I was five years ago’ and ‘I believe that house prices in Canada are overvalued’, by demographics, September 2014
Figure 68: Agreement with the statements ‘I believe that house prices will increase in the coming year’ and ‘My sources of income have not increased as much as the rate of inflation over the past few years’, by demographics, September 2014
Figure 69: Agreement with the statements ‘It is harder to find a job now than it was five years ago’ and ‘I prefer the security of a locked in interest rate over a variable rate’, by demographics, September 2014
Figure 70: Agreement with the statements ‘I believe I/my family will be financially better off a year from now’ and ‘I believe that it is not financially wise to borrow against the equity in your home’, by demographics, September 2014
Figure 71: Agreement with the statements ‘I would consider moving away from my province to take advantage of better economic opportunities in other parts of Canada’ and ‘I think that the stock market will be higher a year from now’, by demographics, September 2014
Figure 72: Agreement with the statements ‘It is better to rent than buy a new home at present’ and ‘I/we are more comfortable with taking on debt now than a year ago’, by demographics, September 2014

Appendix – The Consumer – Financial Priorities

Figure 73: Financial priorities, September 2014
Figure 74: Most popular financial priorities, by demographics, September 2014
Figure 75: Next most popular financial priorities, by demographics, September 2014
Figure 76: Other financial priorities, by demographics, September 2014

Appendix – The Consumer – Attitudes towards Savings and Investments

Figure 77: Attitudes towards savings and investments, September 2014
Figure 78: Agreement with the statements ‘I am aware of the fees that I pay for my banking and investment products’ and ‘I prefer an investment strategy designed to grow steadily and avoid sharp ups and downs’, by demographics, September 2014
Figure 79: Agreement with the statements ‘I prefer to save whenever I can rather than a fixed amount at regular intervals’ and ‘I believe that I will receive objective advice from a financial adviser’, by demographics, September 2014
Figure 80: Agreement with the statements ‘I prefer investments that are low risk even if my returns are lower than the inflation rate’ and ‘Investing in property is safer than investing in equity-based products’, by demographics, September 2014
Figure 81: Agreement with the statements ‘It makes more sense to overpay on a mortgage rather than add money to savings/investments’ and ‘I have set up a direct debit transfer to my savings account every month’, by demographics, September 2014
Figure 82: Agreement with the statements ‘It is better to have all savings and investments with one financial institution’ and ‘I prefer to have my savings at a local credit union rather than at a big bank’, by demographics, September 2014
Figure 83: Agreement with the statement ‘I am thinking of switching my main financial institution within the next 12 months’, by demographics, September 2014

Appendix – The Consumer – Chinese Canadians and Savings and Investments

Figure 84: Selected demographics, by total population against Chinese Canadians, September 2014

Appendix – The Consumer – Target Groups

Figure 85: Target groups, September 2014
Figure 86: Target groups, by demographics, September 2014
Figure 87: Ownership of savings and investment products, by target groups, September 2014
Figure 88: Choice of financial institution, by target groups, September 2014
Figure 89: Choice factors when choosing financial institution, by target groups, September 2014
Figure 90: Consumer confidence, by target groups, September 2014
Figure 91: Financial priorities, by target groups, September 2014
Figure 92: Attitudes towards savings and investments, by target groups, September 2014

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