Canada Wealth Management – Market Sizing and Opportunities to 2028

Canada Wealth Management Report Overview

In 2023, the mass affluent segment made up more than 23% of the Canadian population, making it the third-largest client segment. This continued growth can be attributed to multiple factors over the last few years. Most notably, Canada has experienced steady economic growth, contributing to higher personal income levels and wealth accumulation. Additionally, as the availability and sophistication of financial services increase, more people will manage and grow their wealth effectively. Therefore, wealth managers and wealth providers have a vast population to tap into across Canada.

The Canada wealth management market research report offers a detailed analysis of wealth and retail savings and investment instruments, including deposits, mutual funds, equities, and bonds. The report also provides exhaustive information on where High Net Worth (HNW) individuals distribute their investments. Furthermore, the report assists in understanding offshore investment drivers for the mass affluent, emerging affluent, mass market, and HNW individuals.

Canada Wealth Management Market - Investment Preferences

The key investment preferences in the Canada wealth management market are advisory mandates, discretionary mandates, execution-only mandates, and robo-advisor, among others. In Canada, advisory mandates were the most popular option among HNWs owing to their flexibility, cost-effectiveness, control, and tailored advice in 2023. Clients who wish to be involved in the decision-making process but seek professional advice often choose advisory mandates. Their tailored approaches provide personalized investment advice based on the client’s financial goals, risk tolerance, and other personal circumstances.

Canada Wealth Management Market Analysis by Investment Preferences, 2023 (%)

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Canada Wealth Management Market - Investment Channels

A few of the key investment channels in the Canada wealth management market are advisors at investors’ main banks, investment platform at investor’s main bank, independent financial advisor, investment management company, pension company, and robo-advisor, among others. In 2023, advisors at investors’ main bank are most popular among Canadian investors. Banks often offer a range of financial products and services, from basic investment channels to more complex ones. Usually, bank advisors are positioned to provide integrated advice that considers the customer’s entire financial picture, which can be more appealing than piecemeal advice from multiple sources.

Canada Wealth Management Market Analysis by Investment Channels, 2023 (%)

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Canada Wealth Management Market – Reasons for Holding Wealth Offshore

The key motivating factors to hold wealth offshore in the Canada wealth management market are access to a better range of investments, business interests, local currency volatility, client anonymity, and tax efficiency, among others. In 2023, tax efficiency was the key driver for holding wealth offshore. Canada’s high tax rate makes favorable tax rate locations such as Monaco and the Bahamas highly attractive. Lower or favorable tax rates help shield income from being heavily taxed, meaning HNW individuals can keep more of their money.

Canada Wealth Management Market Analysis by Reasons for Holding Wealth Offshore, 2023 (%)

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Canada Wealth Management Market - HNW Asset Allocation Classes

The major asset allocation classes for HNW investors in the Canada wealth management market include equities, real estate, bonds, commodities, cash and near-cash products, and alternative payments. In 2023, equities were popular among Canadian HNW investors, as they provide diversification, dividend income, and liquidity. Investing in equities has enabled investors to diversify their investment portfolios beyond fixed-income securities and real estate. Additionally, many equities offer dividend payouts that provide a steady income stream.

Canada Wealth Management Market Analysis by HNW Asset Allocation Classes, 2023 (%)

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Segments Covered in the Report

Canada Wealth Management Market Asset Allocation Classes Outlook (%, 2023)

• Equities
• Real Estate
• Bonds
• Commodities,
• Cash And Near-Cash Products,
• Alternative Payments

Canada Wealth Management Market Investment Channel Outlook (%, 2023)

• Investors’ Main Banks
• Investment Platform At Investor’s Main Bank
• Independent Financial Advisor
• Investment Management Company
• Pension Company
• Robo-Advisor

Scope

• 83.9% of Canada’s liquid assets are held by affluent individuals, even though they make up less than half the population. Canada’s largest wealth class, the mass market, only accounts for 1.9% of liquid assets, showing inequality typical of the mature markets of the West.

• Resident bond holdings experienced a decline in 2022, owing to low yields. However, going forward, Canada’s non-resident bonds are expected to increase. Canada’s higher yield compared to other countries (such as those in the Eurozone or Japan) is attractive to international investors.

• Into 2023, equities continued to underperform—especially compared to the US—although 2024 is forecasted to be more optimistic, with an expectation on good returns.

Key Highlights

• Resident bond holdings experienced a decline in 2022, owing to low yields. However, going forward, Canada’s non-resident bonds are expected to increase. Canada’s higher yield compared to other countries (such as those in the Eurozone or Japan) is attractive to international investors.
• In 2023, equities continued to underperform—especially compared to the US—although 2024 is forecasted to be more optimistic, with an expectation on good returns.

Reasons to Buy

• Keep up to date with the Canadian wealth management industry, looking at investors’ asset allocations by affluence bandings as well as unlocking a detailed picture of where HNW individuals distribute their investments.
• Develop an understanding of what investment channels consumers are using in Canada.
• Understand the offshore investment drivers for the mass affluent, emerging affluent, and mass market as well as HNW individuals.
• Develop knowledge of resident savings and investments by looking at the performance and net inflows of bonds, mutual funds, equities, and deposits in Canada.