To mark Investor Education Month, new research from the Canadian Securities Administrators (CSA) offers a look at hybrid investors in Canada – revealing behaviours, motivations, and risk profiles of these investors.
Hybrid investors invest on their own through a DIY or self-directed platform, and have a separate portfolio managed by an investment professional. The research shows 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 investment advisor, especially 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.
Here the key findings from the research:
- Prevalence and demographics: Approximately one in eight Canadians (12%) are hybrid investors. This group is disproportionately younger and 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%) of hybrid investors intend to maintain their dual approach to investing. Among these, 93% express high certainty in their decision.
- Perceived risk tolerance: Hybrid investors indicate they are willing to take on moderate or significant levels of risk with their investments (84%) compared to Canadian investors overall (46%) in a 2024 CIRO investor survey.
- Speculative investing behaviour: Those who worked on a financial plan with their advisor tended to engage in less speculative behaviour in their self-directed account. Speculative behaviours include investing in high-risk alternative investments like crypto and options, buying and selling investments frequently, and taking on significant risk for the chance of a very large return.
- Advisor relationships: Survey data suggests hybrid investors maintain close relationships with their advisors, with many reporting their advisors are aware of their self-directed activities. However, focus group findings indicated a more nuanced reality, with many participants describing a more transactional relationship.
- 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 methods, such as online searches and community forums, rather than structured or institutional safeguards – such as those provided by the BC Securities Commission.
For more information about the research, visit the CSA website.
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