Sixty-five percent of Chinese Canadians have a tax-free savings account

Toronto (October 14, 2014)—The value of assets in the retirement market is expected to steadily rise as the population ages over the next five years, with the strongest growth expected in the tax-free savings account (TFSA) product category. The total value of TFSAs in Canada was estimated at around $62 billion in 2013, with one of the drivers for this growth being its popularity among Chinese Canadians. New Mintel research reveals that almost two thirds of non-retired Chinese Canadians (65%) have a TFSA, compared to 39% of the overall non-retired population.

Sanjay Sharma, senior financial services analyst at Mintel, says:

“Reasons why Chinese Canadians over-index on TFSA ownership could include greater product familiarity and the fact that it is more flexible in terms of contributions and withdrawals than an RRSP. In terms of retirement planning activities performed and the amounts of retirement savings owned, Chinese Canadians are in line with the overall Canadian population, so the fact that their TFSA ownership rate is much higher, is somewhat of an anomaly.

“TFSAs could be an effective gateway or anchor product by financial institutions to attract Chinese Canadian customers. For example, offering high interest rate TFSA savings accounts may be an attractive method of new customer acquisition. Banks could then try to cross-sell other banking and investment products once the initial relationship and trust has been established.”

When it comes to financial planning advice, Chinese Canadians also seem to be more inclined to rate banks as their most trusted source of advice (38% compared to 29% for the overall population), and less likely than average to rate independent financial advisors as their most trusted source (20% as compared to 24% for the overall population).

Mintel research also reveals that Chinese Canadians appear to be better prepared for retirement than the general population. About 45% of Chinese Canadians believe they will be financially secure when they retire, compared to 39% for the overall population. Chinese Canadians are also more inclined than average to find retirement investing to be interesting (45% vs. 39%) and have a higher self-reported knowledge of investing (22% reported a strong knowledge of investments vs. 17% for the general population).