Canadians’ financial resilience has dropped slightly, finds Seymour report

Canadians’ financial resilience has dropped slightly in October, according to the most recent Financial Resilience Index update from Seymour Management Consulting, a Canadian financial consulting firm.

Seymour’s Financial Resilience Index (FRI) was developed over four years, and launched earlier this year, first measuring the financial resilience of Canadian households in February – just before the pandemic hit. The FRI – which measures a household’s ability to get through financial hardship, stressors, and shocks as a result of unplanned events based on nine behavioural, sentiment, and resilience indicators – has since been updated in June and October.

Seymour plans to release new results from the index every four months. The firm bills itself as a purpose-driven consultancy that works to improve Canadian financial well-being. It is a member of centrist policy think tank C.D. Howe Institute and works with financial institutions and the government.

“We created the Index because we wanted to bring to light the behaviours, sentiments, and factors affecting Canadians' financial resilience," said Eloise Duncan, CEO and founder of Seymour Management Consulting.

The national mean FRI score actually jumped from 49.58 in February to 55.58 in June, as the federal government pumped a huge amount of money into the economy through CERB and wage subsidies. Relatively easy access to a $2000 monthly government income means that many on the low-to-no-wage end of the spectrum actually saw their financial fortunes improve. The Canadian government has, however, been racking up national debt during the pandemic at a level outstripping any other G7 country, prompting Fitch Ratings to strip the country of its AAA credit rating in June.

The mean FRI score dropped slightly from 55.8 in June to 54.3 in October. At the national level, Canadians are rated as Approaching Resilience, which denotes that individuals are "building their financial resilience in the absence of financial shocks."

In October, 700,000 households were added to the Extremely Vulnerable category and 340,000 households joined the Financially Vulnerable category. Combined, the two categories represent 10.64 million Canadian adults, or 41% of the population. “The federal government's announcement on Monday of continued financial relief for Canadians through the pandemic is clearly needed, but support could be more targeted to those who need it most,” the report notes.

Canadians from all income demographics can be financially vulnerable or resilient, depending on their behaviours and other indicators. However, renters, women, part-time workers, and underemployed workers were more likely to be in Extremely Vulnerable and Financially Vulnerable categories.

Seymour also examined how well banks are supporting their clients’ financial wellbeing. “We also wanted to help build accountability within the financial industry for banks, credit unions, and others to help improve the financial well-being of their customers throughout their lives,” Duncan said. “With the COVID-19 pandemic and increased financial hardship and vulnerability a persistent issue, this is more important than ever."

BMO was at the head of the Big Five, with 41% of customers rating the bank a 7 to 10 out of 10 for helping to improve their financial wellness as of October – compared to 37% for CIBC, 36% for TD, 35% for RBC, and 34% for Scotiabank.

Financially unsteady households were less likely to heap praise on their primary banking institution. While 54% of Financially Resilient households rated their primary bank highly for helping to improve their financial wellness as of October, only 26.9% of Extremely Vulnerable and 29% of Financially Vulnerable customers did so.