Possibly getting rich quick with a few swipes on one’s phone certainly sounds appealing and based on recent statistics and news reports, more and more Canadians are diving headfirst into the choppy do-it-yourself investing waters.
According to Investor Economics, a financial services research firm, Canadians opened more than 2.3 million gross new accounts between January and December 2020, more than doubling from 846,000 in all of 2019. And there’s no signs of the DIY-investing trend slowing down in 2021. The recent rally of shares in GameStop Corp. has been driven by DIY investors and enabled by consumer investment apps like Wealthsimple Trade and Robinhood.
Employers can play a key role in helping employees help themselves when it comes to making sound decisions during these uncertain and stressful times. The GameStop phenomenon is just one more piece of an increasingly-complex financial picture and, with relatively low rates of financial literacy among Canadian employees, uninformed decisions can lead to potential losses, warns Janice Holman, a principal in investment consulting at Eckler Ltd.
However, she says employers are in a unique position to help employees who may be taking on more than they can handle. “The employer isn’t selling any financial product so they’re an unbiased source of information. They also have the ability to put systems in place to help their employees improve their financial wellness, like automatic deductions from their paycheques to go into retirement savings or student debt repayment plans or group [registered education savings plans].”
In addition to offering financial education or tools through an employee assistance program, she says employers can have the most impact by directly addressing their employees’ financial questions. “The other methods only go so far, but when you actually sit someone down and address their specific questions, it can really affect their behaviour and the outcome. It’s the most effective way to make change, so we’re seeing more employers go the advice route.”
And Holman says there’s also a direct link between the alleviation of financial stress and increased productivity, as well as fewer benefits claims for medication or time off. “Financial stress distracts people while they’re at work, particularly if they work on a computer: they might spend their day looking at bank accounts and bills or their day-trading account.”