CANADA (November 22, 2023) – ISS Market Intelligence (ISS MI), a leading provider of data, insights, and market engagement solutions to the global financial services community and a unit of ISS STOXX, today announced the release of the Investor Economics 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 report forecasts Canada’s household financial wealth (investable assets) to expand from the 2022 The report forecasts Canada’s household financial wealth (meaning investable assets) to expand from the 2022 year-end figure of C$6.186 trillion to C$ $11.244 trillion by the end of 2032, on a projected 10-year CAGR of 6.2 percent. This represents a slowdown from the 7.4 percent pace of wealth expansion in the previous decade, marked by two exceptional years of financial gains for households in 2020 and 2021. Robust market performance and increased savings due to the pandemic significantly increased the aggregate financial holdings of Canadian households by nearly $1.2 trillion from the end of 2019 through year-end 2022.
As the first report since the end of the pandemic, the 2023 Household Balance Sheet Report acknowledges the profound impact of the global crisis on Canadian households. It explores the anticipated lasting changes in financial behaviors and preferences, emphasizing the importance of understanding the permanence of these shifts as the post-pandemic world evolves.
“On the financial front, the post-pandemic world greeted Canadian households with a challenging macroeconomic and market backdrop. With inflation eating into disposable dollars available for savings, and the cost of servicing debt powerfully on the rise—what we term as the Big Squeeze—Canadian households are facing competing demands for their finite financial resources,” said Goshka Folda, Managing Director, Global Head of Research for ISS MI since its acquisition of Toronto-based Investor Economics, where she was President & CEO. “The net result is an expected slowdown in the financial wealth creation pattern for the household sector in the decade ahead, exacerbated by the progression of the final cohort of the vast baby-boomer generation into the retirement phase.”
The report, in its 16th edition, anticipates a significant shift in the demographic makeup of household financial wealth over the next decade. While the baby-boomer cohort continues to command a substantial share, the growth potential of millennials and Generation Z emerges as a dominant force. Opportunities in retirement planning are set to soar, with the aging population creating a demand for flexible retirement products and services.
Canada’s aging population has intensified the demand for improved and more adaptable retirement products and services. By 2032, wealth held by those 55 years and older is projected to exceed C$7.0 trillion, or 63 percent of the overall wealth of Canadian households. This demographic shift presents abundant opportunities for retirement planners, given the increasing number of individuals either in or nearing the payout phase.
Concurrently, Generation X, now navigating the accumulation phase amid challenges posed by a rapidly appreciating housing market, are set to accumulate nearly half of the net inheritance flows forecasted to occur over the next decade—more than C$400 billion in total. Another facet of the wealth transfer landscape involves Generation Z, many of whom are embarking on their careers and seeking initial investment opportunities. They are likely candidates for transitioning into digital investment channels as they come into newfound inheritances.
In the upcoming decade, the report foresees the addition of nearly half a million households to the financially affluent category, meaning those with financial inevitable assets in excess of C$1 million, elevating the share of assets in this segment to 80.1 percent of the total wealth held by Canadian households.
Learn more about the 2023 Household Balance Sheet Report by clicking here.
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