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Canadians prioritize debt, not financial advice: Poll

This article was originally published January 3rd, 2014 at WealthProfessional.ca  To see the article online click HERE.

by  Sophie Nicholls |  3 Jan 2014 | Wealthprofessional.ca

Advisors targeting the lower end of the retail market may have to rethink their strategy as these clients are less inclined to seek out their services, indicates new research released Friday.

A new CIBC poll by Harris/Decima has found that, despite debt repayment being a top priority for Canadians for the fourth year in a row, only 47 per cent of them have met with a financial advisor, and just 6 per cent of those who have would be willing to talk candidly about their debt.

"For the majority of people, debt is scary, debt is frightening," says Ontario advisor Kevin Cahill. "The financial industry has become so complicated and confusing. And, advisors don’t make any money by counselling on debt."

So, Canadians are taking on a 'do-it-yourself' approach to debt repayment that could be inhibiting the growth of your client base. This is an opportunity lost, according to Christina Kramer, CIBC’s vice president of retail distribution and channel strategy, who suggests that having a plan in place is critical to debt reduction.

“While the intent to reduce debt is clear, we also know that some Canadians are not yet making the progress they want to on reducing their overall debt levels, which speaks to the importance of having a clear action plan in place to reach your goals in 2014," said Kramer in a release.

The national poll also indicates that retirement planning has slipped on the ‘to-do’ lists of Canadians, with just 7 per cent identifying it as a priority for 2014, down from 13 per cent in 2011. Contrary to this, paying off bills (like debt) is on Canadian’s minds, with 8 per cent of respondents identifying this as a priority this year, up steadily from 2011.

“Managing cash flow and expenses are immediate issues, but you also can't put off your retirement planning indefinitely,” added Kramer.  “The good news is that if you start early you can take small steps towards building your retirement savings while also focusing on your current financial needs.”

Conversely, research out of the UK predicts that there will be a 20 per cent increase into debt enquiries between January and March – higher than any other three month period in 2013. A recent online survey by Citizen Advice found that 74 per cent of respondents said money issues were impacting their mental health, while more than half (56 per cent) said they were worried about debt affecting their relationships.

The same amount (56 per cent) said debt issues were affecting their work performance, while roughly 25 per cent attempt to take their mind of financial worries by drinking alcohol, eating and smoking. These, according to Citizen Advice, are reasons people would seek financial advice in the New Year.

"It's about breaking down the stigma and all the borders that exist, the silos so-to-speak," says Cahill. "It’s easier to ask for help before it's too late."