Video: Building the financial health and resilience of Canadians

Eloise Duncan: Good morning everyone. I’m Eloise Duncan and thank you so much to FCAC for inviting me to be part of this really esteemed panel. This is such a wonderful conference and such an honour to be part of this incredible dialogue and research discussion around financial wellbeing.

A little bit about me – I am part of a social enterprise and consulting firm called Financial Health Index and Seymour Consulting. We’re looking to measure the financial health and wellbeing of Canadians across the country as a way of true collaboration with FCAC, government and financial institutions and non-profits to help effect positive change for Canadians at scale.

We took the bold leap back in 2016 of designing a quantitative study which was aimed to fill the gap and the void in terms of the measurement of financial health and wellness and resilience for Canadians knowing this is a big issue and it’s so wonderful that FCAC is now progressing incredible financial wellbeing research globally including with gurus like Elaine Kempson in this regard.

Our study is based on 5,000 people across Canada, 5,000 adults and it’s an online survey which was very much designed and informed by our framework which I’ll speak to in a bit but very much inspired by some of the best of the best financial health and resilience studies around the world.

We were very inspired by the 2015 financial capability study led by FCAC, by Celestyna’s ANZ’s fantastic financial resilience studies and work, also informed through Elaine’s incredible work and also through the financial health study led by CFSI which is a collaborative partner in the States.

As we will learn the construct of financial wellbeing is incredibly complex and there are multiple constructs within that. We have defined the overall construct through three different interconnecting constructs. Financial health is basically the financial health is about your ability to balance your financial needs today with those of tomorrow and get through times of financial hardship.

There we measure numerous indicators related to consumer and financial behaviours. Financial wellness is more the emotional aspect. It can be the outcome of all of the behaviours you’re putting in place. It does speak to your emotional peace of mind in terms of your financial state. The opposite is financial stress. We put a lot of emphasis in our work on understanding the financial stress levels, debt stressors etc.

Financial resilience very much informed through the ANZ work is around that ability to weather unforeseen life events, financial stressors and shocks. In there we very much look at different aspects which relate to enablers that someone can put in place such as an emergency savings fund, the ability to weather unforeseen life events such as disability or losing one’s job.

I’ll speak to our overall framework in more detail but we see a lot of synergies with the financial wellbeing work that’s being led by Elaine Kempson and others around the world. We do look at knowledge and skills. We look at confidence and also very much behaviours across the financial services spectrum.

One of the ways that we are hoping to effect positive change is through working with financial institutions specifically to help them better support their customers at scale. We also look at things across the four pillars of daily financial management, borrowing and debt management, saving planning investing and also protecting against unforeseen life events.

This is where the ANZ work has very much informed our work and we do a lot of thinking and exploration around not only economic resources and the income levels people have and income volatility but also around financial confidence, knowledge and behaviours and what behaviours impact financial wellbeing.

The financial products, services and support that consumers can either seek out themselves and/or gain from financial institutions or other organizations and then we also do a lot of work around looking at social capital. That was very much looked at through the previous panel. That relates to whether people share or talk about their money worries and stresses, whether they are able to turn to their close friends for actual financial support and advice in times of hardship and other aspects.

That’s a really important area we’re looking at and on the qualitative front we’re also looking at money scripts and money fears and some of the psychological beliefs that we have about money shaped by our childhood which can impact our behaviours without us even knowing. These are just some of the factors we look at all of which impact financial wellbeing and we believe like everyone else that financial resilience is really a continuous journey of building knowledge and discipline for Canadians.

While people can have quite high financial knowledge and skills, that’s not necessarily translating to behaviours. This is just some of the data from our national studies. Again this is quite echoing of the global research that came out on Canada and that people do have high levels of confidence around their financial skills. That being said, navigating one’s financial decisions can be highly complex and really a maze particularly when planned and unplanned life events come into play.

What we found is although the financial knowledge and skills levels can be quite high a lot of the behaviours are not necessarily as well reflected. These are just a few of the financial behaviours that we look at. We did – again, one of the key indicators that came out around people having to borrow just to keep up with living expenses came out as being a really key indicator for us as well. Sadly in 2018 Canadians had – a third of Canadians had to increase their borrowing over the last 12 months just to pay for things.

Our work highlights that a lot of that is to do with housing affordability challenges, increased challenges with the cost of living and other factors which are outside of Canadians’ control. As a result unfortunately 55% of Canadians, that’s mainstream Canadians don’t feel confident they can get through times of financial hardship.

59% of people don’t have access to savings in case of an emergency. There are a lot of resiliency challenges so similar to some of the other findings. We found that while financial stress levels remain quite high across Canada and while the financial wellbeing number or score can be quite good looked at on its own, when you look under the surface financial resilience is quite challenged and there are particular key segments that are really more impacted than others.

For example, women are much more financially stressed than men. Other key segments that are particularly vulnerable based on our work include renters versus homeowners, the underserved and we have a boost of low income Canadians in our study so they are obviously particularly challenged. Millennials are also very challenged which dovetails with the work and the stats which Brenda showed.

Sadly 38% of Canadians are struggling to make ends meet. This very much mirrors some of the great research that CPA have done around this and when we look at low income households specifically, Canadians that come from households with household income under $25,000 a year, sadly but surprisingly they’re notably more stressed about just being able to get through the day to day.

You can see the second couple of bars. The blue bar is not low income Canadians. The orange bar are low income Canadians with the household income under $25,000 and then we also look at income volatility or income variability. Canadians with high income variability also have not surprisingly much more challenges.

We also look at things like access to financial services, challenges with accessing financial education and support and also usage of the more predatory financial services. Unfortunately pay day loans are being used by about 7% of the Canadian population which very much fits with a lot of the pay day lending work and research that I have led for different organizations.

But that number is quite a big higher for Canadians who have income volatility and those are not all poor people. Those are often people with relatively good incomes. They’re just not making enough to make ends meet. On our website we’ve developed a number of different white papers. There are eight white papers in all which we’ve put a ton of time into to help promote the importance of financial health and wellbeing across Canada.

The last two may be relevant for people. The last one we launched in October speaks to the key numbers for 2018 versus 2017 and then we’ve also been leading work around money shame and some of those deeper emotional beliefs we have around money and how those impact our behaviours and our sense of financial wellbeing. That work is being co-led with my colleague Dr. Maggie Baker who is a financial therapist and PhD so very interesting work which crosses Canada and the States. Thank you so much.

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