Hennick Wealth Management

April 11, 2016 10:00 ET

Is There Jiggery-Pokery in Financial Jargon? Too Many Canadians Unsure of Portfolio Picks

TORONTO, ONTARIO--(Marketwired - April 11, 2016) - Financial jargon can be a major source of frustration and confusion for the average Canadian investor, and according to the results of a recent survey, some Canadians are falling for it too easily. The survey, which was commissioned for Hennick Wealth Management, asked Canadians several investment questions containing made-up financial jargon to see if they could spot the subterfuge. The results show many of us need to ask more questions.

Key Findings of The Survey:

1) An alarming number of respondents believed that the made-up terms were real:

  • When asked if their portfolio was 'diversified in consideration of the Diversified Security Principal (DSP 2016)' - an invented term - 12.3% of respondents responded yes and 29.3% 'weren't sure' for a total of 41.6% confused about the term. 58.4% correctly said no.
  • When asked if their portfolio maximized returns via 'a variable-income securities vehicle' - another nonsense financial term - 18.5% of respondents said they did and 27% 'weren't sure,' for a total of 45.5% confused about the term. 54.6% correctly said no.

When asked if they had ever owned, or were aware of various investment vehicles - some legitimate and others invented - some respondents reported owning investments that don't actually exist:

  • 6.2% of respondents said they had discussed 'Forward Yield Disbursement Bonds' with their financial advisor
  • 5.9%of respondents said they had discussed 'Sub-Prime Mortgage Backed Securities' with an advisor
  • 6.4% of respondents said at one time or another they have held 'White Chip Stocks' in their portfolio
  • 7.6% reported owning 'Shared Earnings Bonds' at some point

2) Men may be overly confident in their investment acumen:

  • 8.4% of men said they have owned 'white chip' stocks (not a real investment) compared to 4.2% of women.
  • 9.2% of men said they have owned 'shared earnings bonds' (not a real investment) compared to 5.3% of women.

3) Nova Scotians know jargon when they hear it!

  • Only 2.9% of Nova Scotia residents surveyed said they've discussed 'Shared Earnings Bonds' (not real) with their advisor. Zero % said they've discussed 'white chip' stocks with an advisor. The country average was 7.6% and 6.4%.
  • Similarly only 2.9% of Nova Scotians surveyed said they've owned 'Forward Yield Disbursement Bonds' (not real) or 'Sub-Prime Mortgage Backed Securities' (not real). The country average was 6.2% and 5.9% respectively.

4) Older Canadians invest with Advisors

  • Of Canadians surveyed, 27.8% they had a financial advisor, while 7.6% said they planned to get one eventually.
  • Men were more likely to say they had a financial advisor at 29.9%, than women at 25.7%.
  • Older Canadians were also more likely to hire a pro. Only 19.7% of respondents aged 25-34 said they had a financial advisor compared to 46.9% of those aged 65 and over.

"Our survey shows that as a nation, our politeness could be costing us," said Adam Hennick, Principal of Hennick Wealth Management. "Canadians need to ask more questions and fully understand everything that they are invested in, if an advisor can't or won't explain investments in a way that investors understand … its time for a new advisor."

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