Research

The CSA conducts investor research studies to better understand the relationships Canadians have with investments, and their views on fraud and regulators. This research also helps us develop new programs and enhance existing ones based on the needs of Canadian investors.

Hybrid DIY Investing: A Research Summary Report

The Report offers a comprehensive examination of hybrid investors in Canada, revealing behaviours, motivations and risk profiles of this investor segment.

Hybrid investors are those who invest on their own but also have a separate portfolio managed by a financial advisor. Overall, the CSA’s research indicates that hybrid investors are younger on average and tend to have a higher risk tolerance than other Canadian investors. However, those with limited engagement with their financial advisor, especially younger investors aged 18 to 34, are more prone to speculative behaviour and are less aware of fraud risks, particularly when relying on self-made or absent financial plans.

Key findings:

  • Prevalence and demographics: Approximately one in eight Canadians (12 per cent) are hybrid investors. This group is disproportionately younger, identifies as male, compared to the general investor population, and is more likely to hold a university degree.
  • Sustained hybrid engagement: A significant majority (68 per cent) of hybrid investors intend to maintain their dual approach to investing. Among these, 93 per cent express high certainty in their decision, a sentiment echoed in qualitative focus group discussions.
  • Perceived risk tolerance: Hybrid investors indicate that they are willing to take on moderate or significant levels of risk with their investments (84 per cent) compared to Canadian investors overall (46 per cent) in a recent 2024 CIRO investor survey.
  • Speculative investing behaviour: Those who worked on a financial plan with their advisor tended to engage in less speculative investment behaviour in their DIY account. This included investing in high-risk alternative investments like crypto assets and options, buying and selling investments frequently, and taking on significant risk for the chance of a very large return.
  • Advisor relationships: The research found contradictory data with regard to advisor relationships. Survey data suggested that hybrid investors maintain close relationships with their advisors, with many reporting that their advisors are aware of their separate self-directed activities. However, focus group findings indicated a more nuanced reality, with most participants sharing that they had a more transactional and distant relationship with their advisors.
  • Fraud awareness and prevention: In focus group discussions, hybrid investors with higher risk tolerance had limited awareness of investment fraud. Those who did articulate a fraud prevention strategy relied on informal or untrustworthy sources and methods, such as online searches and community forums, rather than structured professional advice and institutional safeguards provided by registered advisors.

Investment Fund Continuous Disclosure Modernization

The Canadian Securities Administrators are seeking to better understand retail investors’ challenges, needs, and preferences with respect to investment fund continuous disclosures (CD), with the goal of modernizing the CD regime in Canada to the benefit of retail investors and other stakeholders.

The CSA engaged the Behavioural Insights Team (BIT) to conduct research in support of this goal. The CSA decided to focus on the management report of fund performance (MRFP), a key investment fund CD document that investment funds are required to prepare on both an interim and annual basis. The primary goal of this research was to identify potential changes to the structure and content of the MRFP that would enable Canadian investors to make better choices for themselves through more effective disclosure.

Our mixed-methods research approach, conducted in close collaboration with the CSA, comprised five key activities:

  1. reviewing existing evidence to identify best practices;
  2. surveying over 600 Canadians who hold investment fund securities;
  3. synthesizing findings from the first two methods to identify both key barriers to retail investors fully benefitting from CD, as well as potential interventions to address those barriers;
  4. providing input into the CSA’s development of new MRFP designs based on that synthesis and other key considerations identified by CSA experts (e.g., gaps related to reporting on investment fund liquidity issues); and
  5. running a rigorous online experiment to empirically test the comprehension and usability of new MRFP disclosure document designs.

The online experiment found that the new versions of the MRFP that were informed by behavioural science improved investors’ understanding of information in the report. Two of the three new versions also boosted investor intentions to review a future MRFP and were more positively received (e.g., investors rated them as easier to navigate).

With this research initiative complete, the CSA will now develop a template MRFP form, to be renamed a Fund Report to boost clarity, and issue that for public comment. In 2024, BIT will conduct an additional experiment to test a fourth version of a Fund Report that will be developed subsequent to feedback obtained during the public comment period. We look forward to sharing the results of that trial in an update to this report.

For more information:

2024 CSA Investor Index

The 2024 CSA Investor Index provides valuable insight into Canadian investing trends and fraud in an ever-evolving financial landscape. The long-running survey, first published in 2006, tracks key measurements, including investor behaviour, knowledge, confidence, attitudes towards risk, and incidences of investment fraud. The full Index is available here.

The 2024 CSA Investor Index survey was conducted in March 2024. It consisted of a representative sample of 7,215 Canadian adults, weighted by age, gender, province, and education using 2021 Statistics Canada census data to reflect the actual demographic composition of the population.

Key findings

More Canadians are using social media for investment information: Investors who use social media for investment information increased 18 per cent since 2020 to 53 per cent. Notably, 82 per cent of 18- to 24-year-old investors use social media, with YouTube, Instagram and TikTok being the most popular choices in this age group. Moreover, 46 per cent of Canadians report encountering investment opportunities on social media, which is a 17 per cent increase from 2020, and is also especially common among younger age groups.

Nearly half of investors say they DIY invest: Forty-five per cent of investors say they have a self-directed account, and 30 per cent of these DIY investors first opened that account within the last two years.

Fewer investors report having a financial advisor in 2024: Sixty-one per cent of investors said they currently work with a financial advisor, down eight per cent from 2020. The largest drop was for investors under the age of 45 and those with portfolios less than $100,000.

Investment fraud trends upward for younger investors: While investment fraud has decreased in older demographics since 2006, reported fraud doubled with almost all other age groups.  Younger investors 18-24 years old saw the highest reported increase from 0.4% to 5%.

CSA Research Reports on the Impact of CRM2 on Industry and Investor Behaviour

The CSA is conducting research examining the investment fund industry and investor behaviour following the implementation of Amendments under Phase 2 of the Client Relationship Model (CRM2). The research reports look at trends in investment fund fees and risk-adjusted, gross performance over 2013-2020, which includes the period before and after the Amendments took effect.

For more information:

Archives

CSA Investor Research Study on the Impact of CRM2 and POS, 2016-2019

  • CSA Summary Report: Reports on trends found in the survey results over the four years of the study.  An appendix in this report also contains the text of the survey.
  • 2019 Annual Report: Reports on results of each question in the study for all four years (2016 to 2019).  Contains sections for results nationally, by province, and by advisor relationship segment

2020 CSA Investor Index Study

CSA Investor Education Study 2017

CSA Investor Education Study 2016

2012 CSA Investor Index

2010 CSA Survey on Retirement and Investing

2009 CSA Investor Index 

2007 CSA Investor Study: Understanding the Social Impacts of Investment Fraud 

2006 CSA Investor Index

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