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The Canadian Securities Administrators (CSA) have been releasing a number of research reports providing background information on the nature of advice in Canada. On October 2, the CSA released a report on hybrid investing, the findings of which may be of interest to registered advisers. The two research projects described in the report include results from an online survey of approximately 600 hybrid self-directed investors, and four focus groups among hybrid self-directed investors who identify themselves as having high-risk investing attitude/behaviours.
The study defines "hybrid investors" as those who invest on their own, but who also have a separate portfolio managed by a financial advisor. One in eight Canadians are hybrid investors, and, as compared to the general population they are younger, male, and hold a university degree. Of note, 68% of hybrid investors intend to maintain this approach to investing going forward. Hybrids investors tend to use their DIY accounts for more speculative investing, such as trading frequently (40% traded at least once a week), checking frequently (74% checked at least once a week), and owning speculative investment products. The goals of additional income or "having fun" was more likely for holders of these DIY accounts.
Hybrid investors, according to the study, are willing to take on moderate or significant levels of risk within their investments (84% of investors), but those who work with an advisor on their financial plan generally engage in less speculative investment behaviour in their own DIY accounts. Somewhat concerning was the finding that hybrid investors with a higher risk tolerance had limited awareness of investment fraud.
Studies such as these can help the CSA better understand the way Canadians invest today and whether any regulatory or other outreach actions are warranted.
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