CANADIANS NOT TAKING ADVANTAGE OF RETIREMENT PLANNING PREMIUM HSBC STUDY REVEALS

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Rosalyn Blankenship
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1 Abc 30 May 2011 CANADIANS NOT TAKING ADVANTAGE OF RETIREMENT PLANNING PREMIUM HSBC STUDY REVEALS A global survey from HSBC revealed today that those who have a financial plan in place enjoy a clear planning premium with hard financial benefits, yet 65% percent of Canadian respondents reported not having a financial plan for their future. The sixth Future of Retirement study, The Power of Planning, shows: 65% of Canadian respondents reported not having a financial plan for their future compared to 50% of global respondents. On average, Canadian planners have amassed nearly two-and-a-half times (245%) more money in their retirement plans compared to non-planners. Of those Canadians who worry about coping financially when they retire, 63% report not having saved enough as their number one concern. Only 49% of global respondents shared this worry. Not having enough money is seen as a key stumbling block to undertaking a plan with 73% of Canadians who do not have a plan citing this as the reason. The planning premium Globally, the overarching finding of the sixth Future of Retirement study is the significant financial benefits reaped by those who plan financially for their future. Planners hold a much broader range of retirement and non-retirement assets than those who do not have a plan and they amass a significantly higher value of assets. Planners also enjoy soft benefits such as a much more positive outlook towards later life and being less worried about coping financially in retirement. This news release is issued by

The sixth Future of Retirement study, The Power of Planning, shows: 65% of Canadian respondents reported not having a financial plan for their future compared to 50% of global respondents.

2 Canadians not taking advantage of retirement planning premium / 2 The advice advantage Alongside the planning premium, the findings also show a clear advice advantage for those who seek professional financial advice. In general, advice-seekers report greater levels of financial wealth than non-advice seekers. Globally, those people with a plan who have taken professional financial advice enjoy the benefits of not only the broadest range of financial assets, but also the highest value of assets: the best of both worlds. Planners who have taken advice have amassed nearly two and a half times (245%) the average Canadian retirement assets and nearly nine times (864%) the nonretirement assets of those who do neither. Despite these advantages, Canada had one of the lowest percentages of respondents who indicated having a financial plan for their future. Of the seventeen countries surveyed Canada placed 14 th, with 35% of respondents reporting having a strategy in place. This puts Canada behind Malaysia (84%), China (76%), India (76%) and Taiwan (60%). The only countries that scored lower than Canada were France (30%), Mexico (25%) and Argentina (25%). Trends to watch While Canada did tend to score lower when it comes to financial preparedness it is worth noting that Canadians are not alone. There are major global shortfalls in retirement preparedness; overall 41% of respondents feel poorly prepared for retirement and two-thirds expressed a concern that they will not be able to cope financially in retirement. The emergence of a major East-West divide in retirement perceptions was also clear. The factors driving a positive mindset seem to be closely associated with benign economic conditions and growing wealth in the emerging markets where, even during the financial crisis and recent global economic downturn, there has been continued growth in GDP, fuelling rising household incomes and an increased ability to undertake a strong savings habit.

Globally, those people with a plan who have taken professional financial advice enjoy the benefits of not only the broadest range of financial assets, but also the highest value of assets: the best

3 Canadians not taking advantage of retirement planning premium / 3 An encouraging picture also emerged among younger respondents globally, with relatively high numbers undertaking financial planning and at earlier ages than previous generations. This is especially true for younger women who are more engaged in this area than those in their 50s. 47% of women ages indicate having a financial plan in place compared to 38% of women ages Taking action Canadians understand the importance of saving for retirement. Not having to worry about money was the number one response from Canadians (74%) when asked what was extremely important to achieve a happy retirement, but there seems to be a disconnect when it comes to planning and implementation. Below are five steps that apply insights from this year s Future of Retirement survey, while breaking financial planning down into manageable components. Step 1: Establish some clear goals, both short term and long term Step 2: Benchmark yourself: Are you on track to meet your goals? Step 3: Develop a comprehensive financial plan Step 4: Implement the plan Step 5: Keep your plan under review Start early Overall we can see that those who take the time to put a financial plan in place are far more likely to enjoy a positive retirement. Where people are actively planning ahead, there are genuine benefits to be enjoyed, such as increased access to private pensions and savings products as well as a more positive outlook on retirement. Margaret Willis, Executive Vice President, Retail Banking and Wealth Management, HSBC Bank Canada said: Canadians should be more aware of their long-term financial needs and

47% of women ages 30-39 indicate having a financial plan in place compared to 38% of women ages 50-59. Taking action Canadians understand the importance of saving for retirement.

4 Canadians not taking advantage of retirement planning premium / 4 implement a plan to address these needs, even if they are starting out with a limited amount of money. A small investment now can provide real peace of mind and a positive outlook on retirement later in life. Media enquiries: Ernest Yee Vice President, Corporate Affairs Sharon Wilks Assistant Vice President, Public Affairs Notes to editors: The countries surveyed for The power of planning were: Argentina, Brazil, Canada, China, France, Hong Kong, India, Malaysia, Mexico, Poland, Saudi Arabia, Singapore, South Korea, Taiwan, UAE, UK, and the US. The report surveyed 17,849 financial trendsetters of working age (mostly between 30 and 60 years) in 17 countries. Financial trendsetters tend to be more educated than average, live in urban areas and have greater access to the internet. Those in emerging economies tend to share the same attitudes and behaviour of those in the developed world, including attitudes towards retirement planning. The research was conducted online and survey data was collected on the basis of both household and individual incomes. The report refers to three distinct income groups: high income with gross annual household income over US$100,000; middle income with gross annual household income of US$30,000 to US$100,000; and low income with gross annual household earnings below US$30,000. The Future of Retirement: The power of planning HSBC s Future of Retirement programme is a world-leading independent study into global retirement trends. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world. The 2011 report, The power of planning, is the sixth in the series and is based on interviews with more than 17,000 people in 17 countries. Since the Future of Retirement programme began in 2005, more than 110,000 people worldwide have been surveyed. The programme has positioned HSBC at the forefront of retirement thought leadership, and has raised awareness of HSBC as a leader in the growing retirement services market. The report findings help HSBC to understand and meet the needs of its 95 million customers worldwide. For further information on this and previous reports, visit HSBC, a subsidiary of HSBC Holdings plc, has more than 260 offices, including over 140 bank branches, and is the leading international bank in Canada. Headquartered in London, the HSBC Group is one of the world s largest banking and financial services organisations and one of the industry s most valuable brands. We provide a comprehensive range of financial services to around 95 million customers

Media enquiries: Ernest Yee Vice President, Corporate Affairs 604-641-2973 Sharon Wilks Assistant Vice President, Public Affairs 416-868-3878 Notes to editors: The countries surveyed for The power of

5 Canadians not taking advantage of retirement planning premium / 5 through two customer groups, Retail Banking and Wealth Management (including consumer finance) and Commercial Banking, and two global businesses: Global Banking & Markets and Global Private Banking. Our international network covers 87 countries and territories in six geographical regions; Europe, Hong Kong, Rest of Asia-Pacific, the Middle East, North America and Latin America. Visit: Cicero Consulting A leading consultancy firm serving the banking, insurance and asset management sector, Cicero specialises in public policy consulting as well as global thought leadership and independent market research. Cicero was established in 2001 and now operates from offices in London, Brussels, Washington and Singapore. Visit:

Our international network covers 87 countries and territories in six geographical regions; Europe, Hong Kong, Rest of Asia-Pacific, the Middle East, North America and Latin America. Visit: www.hsbc.

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