The household balance sheet of Canadians, once driven by the need to build up assets to fund retirement, is going through a noticeable transition as debt management has emerged as the leading financial priority. That is not to say that pensions are secured and retirement savings goals reached but rather that household finances are becoming increasingly complex and feeling the influence of the great recession, the subsequent recovery, age, risk aversion and technology. At the same time as the structure of the household balance sheet is being re-modeled, more and more of the assets on those balance sheets will be changing hands as the amount of “money in motion” in the form of inheritance transfers closes in on $1 trillion over the next decade.
If there is change in the make-up of personal finances and personal priorities, the financial services industry has no choice but to follow suit. As we see it, the primary goals will be to maintain profit margins that have strengthened in recent year as the business environment has improved, while simultaneously seeking to avoid getting stuck in the middle in the battle between the titans and the tinies. Those institutions and firms that have limited competitive advantage in terms of product, price or performance risk falling prey to the might of the banks and insurers, the flexibility and creativity of boutiques and the growing number of do-it-yourselfers who have moved from bricks to clicks. These trends will likely lead to the emergence of new and innovative products and more strategic acquisitions and departures. For these reasons, as well as a result of the blurring of the distinctions between channels and the transition in the expected role of advisors, the industry at the end of the decade will look very different than it is today.
The 2013 Household Balance Sheet Report deals at length with all these issues and many more and provides a statistical foundation for strategic thinking whether you are a bank president, a head of a life insurance company, a partner in a private investment counsel firm or a product developer at a mutual fund company. This report is not designed for a select few but for everybody in the financial services who needs a crystal ball. The report, which can be customized to your needs, has been written over the last few months by our subject matter experts who are recognized as thought-leaders by the industry they serve.
Our forecasts and expectations of the future are thought-provoking and important. We would like to discuss them with you. Call us.