Survey reveals increase in fraudulent investment encounters among Canadians

It also shows an increase in the use of social media for investment information
Survey reveals increase in fraudulent investment encounters among Canadians

A national survey commissioned by the Canadian Securities Administrators (CSA) has found that 23 percent of Canadians report encountering possible fraudulent investments, a five-percentage-point increase since 2020.

“How Canadians research and manage their investments continues to change, with more investors seeking information from social media and turning to do-it-yourself (DIY) investing,” said Stan Magidson, CSA chair and CEO of the Alberta Securities Commission. “Surveying investor behaviour on a regular basis allows the CSA and its member jurisdictions to enhance existing investor education tools and develop targeted new programs to help Canadians invest wisely and avoid fraud.”

The 2024 CSA Investor Index offers insights into Canadian investing trends and fraud in an evolving financial landscape. First published in 2006, this long-running survey tracks key measurements, including investor behaviour, knowledge, confidence, attitudes towards risk, and incidences of investment fraud.

Key findings from the survey include an increase in the use of social media for investment information. Since 2020, investors using social media for investment information rose 18 percent to 53 percent. This trend is especially prevalent among 18- to 24-year-old investors, with 82 percent using platforms like YouTube, Instagram, and TikTok. Additionally, 46 percent of Canadians reported encountering investment opportunities on social media, a 17 percent increase from 2020.

The survey also revealed that nearly half of investors engage in DIY investing, with 45 percent having self-directed accounts. Of these DIY investors, 30 percent opened their accounts within the last two years. Conversely, fewer investors reported having a financial advisor in 2024, with 61 percent currently working with one, down eight percent from 2020. This decline was most significant among investors under 45 and those with portfolios less than $100,000.

Investment fraud has notably increased among younger investors. While fraud reports have decreased among older demographics since 2006, reported fraud doubled in almost all other age groups. The highest increase was observed among 18- to 24-year-olds, rising from 0.4 percent to 5 percent.

The 2024 CSA Investor Index survey, conducted in March 2024 by Innovative Research Group, consisted of a representative sample of 7,215 Canadian adults. The sample was weighted by age, gender, province, and education using 2021 Statistics Canada census data to reflect the actual demographic composition of the population. Additionally, weighting targets were set by investment portfolio size and type of investment accounts, using data from Statistics Canada’s Survey of Financial Security to accurately reflect the population of Canadian investors within the sample.

The 2024 CSA Investor Index is available on the CSA website. It also offers various tools and resources to help investors avoid fraud and verify the registration of any individual, firm, or platform they plan to work with. Canadian investors are encouraged to visit the site to learn more about making informed investment decisions.