TORONTO (September 30, 2021) – Investor Economics, a leading provider of research, data, and business intelligence to the global financial services community and a part of the ISS Market Intelligence division of Institutional Shareholder Services, today announced the release of the Household Balance Sheet Report, a biennial review and forecast of the state of Canadian household wealth and its impacts for the retail financial services industry.
The 2021 Household Balance Sheet Report forecasts Canada’s household financial wealth (investable assets) to expand from the 2020 year-end figure of C$5.556 trillion to C$ $9.590 trillion) by the end of 2030, on a projected 10-year CAGR of 5.6 percent. This represents a slowdown from the 7.1 percent pace of wealth expansion in the previous decade which culminated in two years of extraordinary gains for the household financial wallet in 2019 and 2020. Strong market contribution and pandemic-intensified savings inflows swelled the financial pot of Canadian households by more than $1.1 trillion between the end of 2018 and 2020.
The report, now in its 30th year, incorporates factors such as assumptions of resulting deep changes in debt- and risk-taking, expenditure and saving patterns, along with exogenous factors, such as interest rates, economic and income growth, and demographic shifts.
“The pandemic has precipitated myriad changes, ranging from how Canadians work, the type and location of preferred dwellings, and how much they save and so, as lockdowns are lifted and the post-pandemic world emerges, the key question is how permanent—or not—these changes will be,” said Goshka Folda, President & CEO of Toronto-based Investor Economics. “Our assessment as reflected in the report eschews the Pollyanna perspective of the world returning to a picture-perfect, pre-pandemic past in favour of significant and permanent changes in household financial behaviours and preferences.”
Investor Economics predicts the next decade will witness a change in the demographic makeup of household financial wealth and the speed of wealth expansion by the various age cohorts. By the end of 2030, the baby-boomer cohort will have fully transitioned into the 65-year old or greater age bracket. While continuing to hold a commanding household wallet-share, at nearly half of Canada’s household financial wealth, the senior segment’s growth will continue to moderate. In relative terms, the projected growth of the financial wealth of millennials will beat the expansionary potential of the baby-boomer generation by a factor of three. Generation Z is expected to gain nearly C$300 billion in financial wealth over the next decade – starting with very few assets to their name.
Canada’s aging population has created a greater need for better and more flexible retirement products and services. By the year 2030, wealth held by those 55 years and older will have surpassed C$6.4 trillion, or 67 percent of the total wealth of Canadian households. Opportunities for retirement planners abound with a population increasingly in or approaching the payout phase.
Meanwhile, Generation X, currently in the middle of its accumulation phase and beset with the challenges facing a rapidly appreciating housing market, are set to accumulate over half of the net inheritance flows forecasted to occur over the next decade—more than C$450 billion in total. A smaller piece of the wealth transfer puzzle is that of Generation Z. Many are starting their careers and are seeking to invest for the first time and are likely candidates for transition into digital investment channels with newfound inheritances.
Over the next decade, Investor Economics predicts nearly half a million households will join the ranks of the financially affluent, moving the share of assets in the category upward to 76.4 percent of total Canadian household wealth.
Learn more about the 2021 Household Balance Sheet Report by clicking here.
About Investor Economics
Investor Economics is a part of ISS Market Intelligence (a division of Institutional Shareholder Services) which provides research, data, and business intelligence to the global asset management community. We work closely with our other lines of business to provide insight and value to clients across the world, delivering research in the U.S., Europe and Australia.
About ISS Market Intelligence
ISS Market Intelligence (MI) division provides critical data and insight to global asset managers, insurance companies and distributors to help them make informed, strategic decisions to manage and grow their business. Through its industry-leading combination of proprietary and integrated datasets, in-depth global research and reliable executive engagement, ISS MI delivers solutions for market sizing, competitor benchmarking, product strategy and opportunity identification across a wide range of financial products including funds, annuities, insurance, mortgages, and other instruments. The ISS MI group includes the industry-leading data platforms Simfund, BrightScope, Local Market Share, and Financial Clarity, as well a full collection of global research and analytic services including Investor Economics, Market Metrics, and Plan for Life.
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