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Younger Canadians not getting ahead financially and can’t count on inheritance, Manulife Investor Sentiment Index shows

WATERLOO, ON, Jan. 8, 2014, Younger Canadians feel that they are not getting ahead financially and they shouldn’t count on an inheritance according to the Manulife Financial’s latest Investor Sentiment Index. The Index also showed that despite robust capital markets at pre-financial crisis levels, Canadians’ overall investor sentiment remains mired in the recession.

Almost half (46 per cent) of Canadians aged 25-34 say they are worse off financially than they were two years ago while 40 per cent of those aged 35-44 say they are worse off financially. Despite that, 62 per cent of Canadians aged 25-34, say they’re optimistic that they will be in a better financial position two years from now, while 60 per cent of those aged 35-44 say they remain optimistic for the future.

The latest survey results also show that it isn’t likely that younger Canadians – part of a generation which has traditionally been challenged by a difficult job market and underemployment – will receive much help in the form of future inheritance. Nearly half of Canadians (43 per cent) report that they haven’t given any thought to how much cash or assets they’ll leave to their heirs. As many as 13 per cent say they plan to leave nothing, while more than one in four (29 per cent) say they will leave less than $100,000. Only two per cent of Canadians report that they will leave an inheritance of $1 million or more.

“The reality is that young Canadians will be the first generation to not be better off than their parents. Many Canadians haven’t even thought about what cash or assets they will leave to their children,” said Paul Lorentz, Executive Vice-President, Retail Markets. “Young Canadians might need some of the financial discipline of their great grandparents, those who lived through the Depression, coupled with modern financial solutions.”

Investor Sentiment Index dips despite continuing market recovery
Overall, investor confidence in Canada was down slightly since May of 2013 as the Investor Sentiment Index dipped by one point, to +21. The Index is up one point from a year ago when it was +20 and it remains substantially higher than it was at the start of the economic downturn in 2008 (+5).

“In these latest results, we saw a marked change to a positive trend we’ve been seeing for some time,” said Mr. Lorentz. “Typically, the Investor Sentiment Index follows the same general pattern as the markets, but despite the gradual recovery there, the Index slipped suggesting that Canadian investors still aren’t finding much comfort in more robust markets. Canadians are still wary.”

Provincially, Alberta residents appear to be Canada’s most confident about investment and savings vehicles, posting an overall Investor Sentiment Index score of +30, while Quebec posted the lowest score at +8.

Maintaining current lifestyle no longer a priority for Canadians
Index results also point out that Canadian investors of all ages have made one significant shift in their financial priorities for 2014. Entering 2013, Canadians were focusing on paying down debt (top priority: 31%) while still maintaining their current lifestyle (second priority: 22%). Today, only 1% of Canadians indicate that maintaining their current lifestyle is a financial priority – a drop of 21 percent.

Regardless of income or age, Canadians’ top financial priority for 2014 is to pay down debt (29 per cent), followed by reducing spending (11 per cent), saving for retirement (9 per cent), saving for a rainy day (8 per cent) and paying down a mortgage (8 per cent.)

“We’re seeing that debt management, reducing spending and saving are, more than ever, top of mind for Canadians but just as importantly, that Canadians are also more aware of the financial choices they’re making. They’re making good financial decisions to put their finances in order for the future even knowing that they may not be able to maintain their current lifestyle because of them,” added Mr. Lorentz.

Advisors make significant impact
Four in ten Canadians report having a financial advisor which proves to be one of the most significant influencers on Index score. The Investor Sentiment Index score for individuals with an advisor is +27, while it is +16 for those without an advisor.

“Clearly, having access to professional financial advice will help you stay on track,” added Mr. Lorentz. “We see time and again that having an advisor is also the single most important positive influence on an individual’s peace of mind with their financial position now and in the future.”

Canadians with an advisor are less likely to cite paying down debt as a priority, but they are more likely to mention saving for retirement. Those who work with an advisor are also significantly more likely to feel that they are on track with their current financial goals (52 per cent vs. 36 per cent) and they are more likely to say that they are in a better financial position than they were two years ago.

About the Manulife Financial Investor Sentiment Index
The Manulife Financial Investor Sentiment Index is a semi-annual measure of investors’ views on a range of asset classes and savings and investment vehicles, as well as their confidence in these areas. The index is based on an online survey of 2,000 Canadians aged 25+ that was conducted November 12-22 by Research House, an Environics Company. A national probability sample of this size would have a margin of error of +/-2.2 percentage points, 19 times out of 20.

About Manulife Financial
Manulife Financial is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Clients look to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife Financial and its subsidiaries were C$575 billion (US$559 billion) as at September 30, 2013. The Company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States.

Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife Financial can be found on the Internet at manulife.com.

SOURCE:

Manulife Financial Corporation

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Tips For Charitable Giving: Research Nonprofit Organizations; Understand Current Laws To Maximize Tax Deductions

Seattle #1 in online giving

SEATTLE, End-of-the-year charitable giving to favorite nonprofit organizations is on the to-do list for many King County residents this week, inspired by a spirit of generosity as well as a feeling of uncertainty as Congress debates the future of the charitable tax deduction.

The average person makes 24 percent of his or her annual donations between Thanksgiving and New Year’s Eve, according to research from the Center on Philanthropy. There is speculation that that may increase this year, as people step up their giving in preparation for a potential change in the charitable tax deduction. Congress is debating whether to eliminate or limit the tax benefit for charitable donations as part of the broader “fiscal cliff” negotiations.

“Generosity, the holiday spirit and year-end tax planning are a powerful combination in philanthropy,” says Norman B. Rice , president and chief executive officer of The Seattle Foundation. “The uncertainty around the charitable tax deduction may prove to be a catalyst that spikes year-end giving even more than usual.”

The Seattle Foundation, which manages more than 700 charitable giving funds for families and businesses in King County, is seeing a steady flow of gifts as we approach year-end, including many in the form of appreciated stock. Under current tax law, donations of long-term capital gain assets, such as appreciated stock, generally qualify for a deduction at the fair market value, enabling donors to avoid capital gains tax on the appreciation. This strategy is appealing for two reasons. Stocks, in many cases, have regained value lost in the recession and given the potential of charitable deduction limits in 2013, it may be a tax-wise and generous gift.

Strategies for End-of-Year Giving

The Seattle Foundation advises people making end-of-the-year gifts to consider the following:

Open a donor advised fund If you are concerned about the future of the charitable tax deduction, this may address your fears. A donor advised fund is a charitable giving account that allows you to donate now and secure a deduction for 2012, and make decisions in the future about specific gifts to nonprofits. The money in your donor advised fund is invested and can grow tax-free, as you recommend when and where gifts are made. Donor advised funds are available from community foundations, such as The Seattle Foundation, and some national financial services firms.

“A donor advised fund is the perfect tool for people who want to make a gift by year-end but are uncertain as to how they specifically want their charitable dollars distributed,” said Rice. “It also makes giving much easier, allowing people to focus on their philanthropy free of checkwriting and reporting as we handle all of that.”

Research the nonprofits Seek out organizations that match your specific interests and demonstrate financial health, accountability and transparency, and meaningful impact. People interested in finding organizations and causes to support have a very useful resource in The Seattle Foundation’s website, which offers a directory of more than 1,500 nonprofits serving King County. The site makes available for the first time The Seattle Foundation’s internal evaluations of nonprofit organizations, helping you make the wisest decisions possible with your giving dollars. At the website’s “Giving Center,” you can search nonprofits to find groups that best match your interests by mission, geography, clients served and other criteria. A search of nonprofits for the topic “housing,” for example, can be refined to organizations specifically supporting homeless individuals with special needs on the Eastside.

Make Unrestricted Gifts If you are confident in the health and management of the nonprofit organization, then make an unrestricted gift that will allow it to use the funds where they are most needed. Nonprofits face substantial reductions in government funding and unrestricted gifts to support basic operations, rather than earmarked for individual programs, are critical.

Focus Your Giving: Consider making fewer, larger gifts and focusing your giving in one area. Larger gifts have larger impact, which is important to you as the donor. More targeted giving also enables you to become more focused, passionate and knowledgeable about the causes you care about. And from the recipient’s perspective, keep in mind that nonprofits have transaction and cultivation costs associated with every gift, regardless of size.

Seattle Ranks #1 in Online Giving

Given our region’s standing as a leading technology hub, it’s no surprise that Seattle was #1 in Convio’s annual ranking of the top ten most generous large cities in online donations during 2011, based on per capita giving. The 2011 rankings are based on the almost $1.355 billion in total online donations generated through the Convio online services used by nonprofit organizations across the nation. Seattle held the fourth ranking in 2010. (Note: The Seattle Foundation does not use Convio services.)

This is good news for King County nonprofits, who can expect to see a spike in online gifts in the coming days. Twenty-two percent of all online gifts to charities are made in the last two days of the year, according to Network for Good.

The Seattle Foundation’s web site facilitates online giving to hundreds of nonprofit organizations. It is also the centerpiece of GiveBIG, the day-long online giving campaign held on May 2, 2012 that asked people to visit www.seattlefoundation.org and donate to their favorite nonprofit organizations. People made a total of more than 37,000 online gifts totaling $7.4 million for GiveBIG, and those donations were matched by $800,000 from The Seattle Foundation, local companies and philanthropists. The success of GiveBIG boosted online gifts made through www.seattlefoundation.org to $7.7 million up from $3.6 million in 2011.

“Online giving is growing dramatically here and across the nation,” said Rice. “Donors favor the ease and convenience and it enables people to respond very quickly in times of crisis and national disasters.”

Established in 1946, The Seattle Foundation fosters powerful and rewarding philanthropy to make King County a stronger, more vibrant community for all. It is the oldest and largest community foundation in the region, with more than 1,200 family, business and nonprofit funds and assets of more than $600 million. The Seattle Foundation awards more than $60 million in grants each year. Learn more about the Foundation and visit the Giving Center at www.seattlefoundation.org.

SOURCE The Seattle Foundation

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