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When it comes to retirement planning, the headlines for Canadians are pretty bleak.

The recently released Natixis Investment Managers 2022 Global Retirement Index shows Canada dropped five spots to 15th place out of 44 developed countries with lower scores in areas such as material well-being, tax pressures and overall happiness. The report also says Canadians underestimate the impact of longevity, inflation and health-care costs on savings.

The latest Canadian Retirement Survey conducted by Abacus Data for the Healthcare of Ontario Pension Plan also shows more than half (55 per cent) of adults were concerned about having enough savings in retirement, up 6 percentage points from last year.

A lack of financial literacy is largely to blame for the dire retirement outlook, says Myron Genyk, chief executive officer at Evermore Capital Inc., in Toronto. He points to research showing about 30 per cent to 40 per cent of retirement wealth inequality is due to a lack of financial knowledge.

Globe Advisor spoke to Mr. Genyk about how advisors can help investors improve their financial literacy.

Are we in a retirement crisis in Canada, as some studies suggest?

Not everybody’s in a crisis – some people are doing just fine. But a study that sticks out in my mind shows that 32 per cent of adult Canadians haven’t saved a penny. Why is that? Part of it is socio-economic.

For some, it’s impossible to save money. But there’s also a good number of Canadians who have the ability to save for retirement who just haven’t done so. And why not? It goes back to financial literacy.

You can be socio-economically privileged and have a great education, but if you’re financially illiterate, the odds are against you having significant retirement wealth.

How should an advisor approach financial literacy with a client?

Financial literacy can be broken up into four different areas – how to spend, how to borrow, how to save, and how to invest.

It sounds simple, but many people just don’t know how to save and invest or how much. There are several rules of thumb out there, but when you’re investing for retirement, you need to be pretty financially savvy. It’s about asset allocation, diversification and making sure you choose the right securities. Then you should rebalance as needed.

You recently launched a target-date fund at Evermore. Why now?

Until recently, Canadian investors didn’t have access to these kinds of low-fee, all-in-one retirement solutions.

In the past 18 months, three different asset managers have come to market with different retirement solutions, including Purpose Investments’ Longevity Pension Fund, our target-date exchange-traded funds (ETFs) at Evermore, and more recently, Guardian Capital Group came out with longevity and decumulation funds. So now Canadians have a much better menu of options for retirement investing.

It comes back to financial literacy. It’s a huge problem. People don’t know how to invest their savings. These are new, innovative products that can help make retirement investments more accessible.

What else should advisors do to help their clients save for retirement?

A crucial role that advisors play is as a coach, reminding their clients to stay the course when it comes to investing, especially when markets drop.

Remind them that you have a game plan. You can make minor changes as markets change, but don’t drastically change the plan. Most good advisors have already mapped out what they’re going to do when markets are hot and what to do when they’re not.

It’s about making sure that their clients aren’t freaking out and cashing out at the worst possible time.

This interview has been edited and condensed.

- Brenda Bouw, Special to The Globe and Mail.

Must-reads from Globe Advisor this week

Investors pile into inflation-focused mutual funds

The topic of inflation and its impact on various asset classes is at the forefront of discussions between advisors and clients as the cost of living continues to surge and financial markets remain volatile. Data show money has been piling into inflation-focused funds as advisors look to protect client portfolios from the eroding effects of high inflation. If an advisor considered allocating 10 per cent to inflation protection, 6 per cent of the equity allocation and 4 per cent of the bond portion should be placed into the inflation-focused fund, says a strategist. Michelle Zadikian looks at the various strategies around using these funds.

New women-run ETFs hit the market to highlight their strength as money managers

Women-focused ETFs have had a challenging history in Canada, but some providers are betting investors can be lured back as women increasingly earn and manage more wealth. Emerge Canada Inc. recently launched a set of active sustainable ETFs with a different take – they’re all run by women. Brenda Bouw reports on the market for such funds and what they say about the investment industry as a whole.

Nuclear-related investments beyond uranium appear set to flood the market

Uranium remains one of the only ways retail investors can bet on the nuclear power renaissance. That, however, is about to change. The largest players in nuclear construction, maintenance and waste disposal are either privately held or they‘re part of large, diversified multinationals. But the spinoff process is already under way and that will lead to many more investment opportunities, according to experts. Jameson Berkow reports on the outlook for the sector and how investors can get involved.

Why now is the time to boost emergency savings – not dip into them

With the cost of goods rising and interest rates climbing, some Canadians are looking to their pandemic and emergency savings as much-needed support in covering their expenses – whether essential items or non-discretionary purchases. But advisors say finding strategies to protect and even bolster that cash cushion instead puts clients in the best position to handle future challenges with a recession looming. Helen Burnett-Nichols speaks to experts about how to implement changes around saving and spending right now.

Also see:

How target-date funds providers shift asset allocation amid market volatility

Demand for advisor education on ESG jumps as client interest grows

Tech stock shocks test concentration risk for ETF investors

Asset managers may regret becoming the new banks

What to expect financially when you’re expecting

What you and your clients need to know

Invesco Canada partners with NEI to boost ESG-focused ETFs

Asset manager Invesco Canada Ltd. is partnering with ethical funds pioneer NEI Investments to boost its socially responsible investing lineup of ETFs, an area that has seen a wave of new products emerge as fund companies compete for investors who want greener options. The move will enhance Invesco’s existing environmental, social and governance index ETFs, as well as develop new ESG ETFs that will begin to launch in 2023. Clare O’Hara reports on opportunities in the space.

Balanced fund alternatives for the whiplashed investor

Market headlines have spent most of the year flipping between variations of “stock markets hit new high (or lows)” and “inflation at all-time highs (or eased).” Investors are undoubtedly feeling the whiplash in their investment accounts and may feel equally uneasy about deciding what to do next with their savings. Danielle LeClair of Morningstar Research looks at multi-asset products, also known as balanced or allocation products, for the best returns.

How taking a 12-hour walk can allow you to rethink your career and life

What’s your Everest? One expert thinks too many of us have given up on our dreams without finding anything equally exciting to replace them. We get so caught up in what we think we have to do in our lives that we stop listening to our hearts. To get in touch with your dreams, he suggests taking a long, solitary walk. He recommends it be a half day (12 hours), with no music, podcasts or other diversions, and your phone on airplane mode, available only for an emergency or to record a note to yourself. Harvey Schachter looks at how people can grapple with limiting beliefs that are holding them back.

Globe Advisor Staff

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