OTTAWA — When it comes to financial literacy, Canadians find themselves in the middle of an underachieving pack.

Only 13 per cent of Canadians understand financial risk, suggests TNS Finance's Personal Risk Assessment and Risk Literacy Survey.

"It's the same as the average across all the countries that were surveyed, but that's not an impressive number," says Rhonda Grunier, vice-president of TNS Canadian Facts, the Canadian arm of TNS, an international research firm.

Survey respondents, aged 18 and over, were tested on three questions: assessing the relative payout of two lotteries, the relative risk and returns from two investment funds, and the relative risk of investing in a single stock versus a basket of stocks.

"When you look at the three of them, that sort of assess a range of investment and risk knowledge, we thought that number of 13 per cent was quite low," said Grunier.

Not that other 14 areas surveyed had a significantly better showing — the Netherlands had the highest percentage of correct answers, at 21 per cent, with Hong Kong and Luxembourg tied for second place at 18 per cent. Mexico (seven per cent), Portugal (six per cent) and Argentina (five per cent) brought up the rear.

While only 13 per cent of Canadians could answer all three questions correctly, individual results are less grim: 57 per cent know a basket of stocks is less risky; and 36 per cent were able — given the choice between two lotteries with different payouts and chances of winning — to identify which gave the better odds for a good payout.

"There are certainly signs that people do have some understanding," said Grunier, indicating that some investment messages are getting through.

The survey found that only nine per cent of women could answer the three questions correctly, compared with 16 per cent of men.

"I think that's sort of a throwback to the traditional roles that people have in their households, that traditionally women would tend not to be as highly involved in household financial matters as their spouse might be — especially when it comes to investments, they might take a back seat," said Grunier.

TNS says that despite this lack of knowledge, only 10 per cent of Canadians indicated they have tried to learn more about finances matters since the global economic crisis began. Grunier says financial institutions need to step up their efforts to educate their clients.

"Helping to create a well-informed consumer makes good business sense for financial institutions. It's a possibility that even the most well-educated consumers may just disengage because they are too afraid to invest in products they cannot understand."

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