Advisor opportunity: Affluent Canadians more conservative when it comes to investing

Advisor opportunity: Affluent Canadians more conservative when it comes to investing

Advisor opportunity: Affluent Canadians more conservative when it comes to investing At least those are the findings of a new survey. While affluent Americans seemingly see no end to the six-year bull-run, Canadians are wondering if things will only get worse.

Manulife’s twice-yearly Investor Sentiment Index is out. One of the key findings points to affluent Canadians – defined as 25 or older, $75,000 or more in household income and $100,000 or more in investable assets – being more pessimistic about our current economic situation than their American brethren.

WP reached out to Victoria’s Chris Raper, a Raymond James advisor with almost $200 million in assets under management, for his thoughts on the findings. In fairness to Raper, the question was asked off the cuff during a phone interview to learn more about his practice. He hadn’t read the report’s findings; we simply paraphrased them while we had him on the phone. 

Specifically, we wanted to know if Canadians are more conservative when it comes to investing, a conclusion one might ascertain based on the survey’s finding that affluent individuals north of the 49th parallel are holding 34% cash compared to just 13% for Americans.

Raper’s take:

“No, I don’t believe that [Canadians being more conservative]. My sense is, and it’s unprovable obviously, is that more Canadians recognize the importance of oil to our economy and they know intuitively that oil effects every other part of the economy. Ergo, it affects banks, it affects consumer companies, and down the list. Therefore, they’ve taken money off the table.”

Another possibility at work here is that Canadians are more realistic when it comes to stock market expectations. Equities in both Canada and the U.S. have had a good run since the financial crisis in 2008. The negative economic rumblings that first started appearing last fall might have given Canadians pause.

This new reality gives advisors an opportunity sometime in the future to put to work some of the 21 percentage point cash differential.

Cash currently might be king – but it likely won’t stay that way if oil prices keep slinking upward.