FRED:  Welcome to the Scotiabank Podcast. I’m Fred Ketchen, Director of Stock Trading for ScotiaMcLeod. These regular podcasts call on some of Scotiabank’s most knowledgeable experts to help you make the most of what you have. Here we’ll discuss strategies designed to put you in the financial driver’s seat.

In today’s episode, I’m joined by Gareth Watson, Senior Equity Advisor at ScotiaMcLeod. Gareth is going to share with us his take on some recent findings on attitudes in investing in today’s current market.

So Gareth, 2008 has been a roller-coaster ride for investors. Have we seen a significant shift in how people are investing their money as a result of these ever-changing markets?

GARETH:  Yeah, 2008 certainly was a roller coaster Fred in terms of how investors approached the market place. We encountered a number of different difficulties in the last four months of the year. The global economy went into recession. We had all kinds of credit difficulty for both individuals like you and me; and also for corporations trying to get access to capital for investment. We had a number of economic woes not just here in North America but in other places around the world including Europe and Asia; and, of course, the stock markets were problematic, the TSX posting a 35% loss in 2008 which is one of the worst declines that we’ve seen going all the way back to the Great Depression. In fact, in a research study done by Harris/Decima for Scotiabank, we’ve found the current economic situation has begun to impact Canadian investors attitudes about investing. In fact, in the study we found that one-in-four investors are taking a more conservative approach to their savings and their investments.

FRED:  Is this across all ages and across all stages of life?

GARETH:  Yes, it is but it’s natural to assume, of course, as you get closer and closer to retirement, you think more and more about your retirement savings. So, this is particularly true among investors that are heading into retirement, looking hard at things, such as business succession planning and also estate planning for their families. So those investors that are aged 50 or above. In fact, one-third or 35% of those investors have decided to push back their retirement age.

FRED:  Pushing back their retirement age? Now that seems like a significant life change. Is there anything else that Canadians could do to help fill that gap that’s been created as a result of a change in their investments?

GARETH:  There’s a number of steps that can be taken. One thing that some people are doing, of course, is investigating a semi-retirement or possibly a second career, but also increasing their savings just not spending as much; and I think that this reflects more upon a lesson that was learned by a lot of investors namely down the United States in 2008 and that is try not to live beyond your means. To live on the wealth that you create for yourself and not on borrowed money. We have a number of examples of people in the United States that have run into difficulty with this; and its not to say that it can’t happen in Canada as long as Canadian investors take the appropriate approach to their investment strategies and to their day-to-day savings and spending. So, when we look forward for example, to retirement for those people approaching retirement, it might be worthwhile to reflect on their retirement needs. What they might have originally thought those needs would be a number of years ago may have changed because expectations change with economic conditions. So for example; instead of perhaps having that condo down in Florida maybe perhaps you will retire somewhere locally here in Ontario.

FRED:  Aside from those changes then, what are people doing today that’s different from what they did in previous years?

GARETH:  Well, our study shows that investors are, in fact, keeping a closer eye on their investments; about 39% of investors have done that. Even more impressive is the fact that about 59% of those investors do have a financial advisor and, in fact, 55% of the investors in our study have reported they are now likely to seek a second opinion on their investments. Three in ten of those investors, or 30% have already done so at a financial institution that they don’t even normally deal with.

FRED:  What’s so important about these statistics then?

GARETH:  I think most importantly is that we’re moving away from the old “do-it-yourself” type investor. The markets were very kind to us, here in Canada, from 2002 till about June 2008. That’s a very long time to have a bull-market in Canada and for that reason there’s a lot of people, of course, that have taken their investment approach on their own instead of seeking the advice of a professional. The investment process can be very complex. So, I think we’re going to see more of those “do-it-yourself” investors turn towards professionals within the industry and its not just basically to create a longer-term plan but to become more educated about their investments. Education for investors and staying up on top of their investments is very important to them and, hopefully, what that will result in less reactionary behavior of which we saw a lot in 2008. Of course, in looking to professionals to seek advice there’s going to be more engagement with investors. Just like any important “big-life” decision that you’re going to make, financial decisions fall within that category; and, so investors out there should not hesitate and look to find professionals to find answers to their questions. There should be also greater demand for retail banks and brokerages to offer these services; and, one other thing that I note is that we will probably see an increase focus among affluent investors on customized wealth management solutions. So that investment strategies will align with their wills, with their estates, with their trust and wealth preservations strategies.

FRED:  Thank you Gareth, for sharing your take on Canadians’ attitudes towards investing in today’s ever-changing market. We hope that this discussion has helped you; our listeners understand how Canadians are feeling in these volatile times, and perhaps help you during this important investment decision-making time of the year.

Thank you for joining us, I’m Fred Ketchen. For more information, please visit your local Scotiabank or Scotia McLeod branch. We’ll help you make the most of what you have.