Surveys What Financial Planning Means
to Canadians
For more details try: Detailed Findings
- a full report including detailed analyses of the responses to each question
asked.
INTRODUCTION
Recognizing the importance of understanding how financial
planning fits into Canadians' lives, Financial Planners Standards
Council commissioned a consumer survey to help guide the direction
of FPSC, its CFP professionals and all organizations and individuals
interested in benefiting the public and the financial planning
profession.
On behalf of FPSC, Hart & Associates Management Consultants conducted interviews during a three-week period
in late July and early August 1999 of individuals who were
responsible for the financial planning aspects for their family.
We wanted to find out what Canadians think financial
planning is, what motivates them to use a financial planner,
and how they think financial planners might best help them.
How was this study conducted? Hart & Associates conducted 750 random telephone interviews
with a broad range of Canadians across Canada. Quebec was
omitted from this review as this province has a very different
licensing practice for its financial planners. To qualify
for this survey, respondents had to have some type of investment
ranging from simply a modest bank account up to formal investments
in RSP and non-registered investments.
Interviews were conducted in a three-week period
in late July and early August 1999. Interviews were conducted
on Hart & Associates' CATI interviewing system, which
directly captures responses into a computer system that allows
for timely and detailed analysis.
Responses to this survey are accurate within
plus or minus 3.5% nineteen times out of twenty.
Summary of Key Findings
What does financial planning mean to Canadians?
Most people associate financial
planning with:
retirement planning
ensuring their financial security
saving and investing.
Most people believe the
three most important elements of a financial plan are:
a retirement income forecast,
a family budget
and a will.
Other items Canadians think
should be included in a financial plan are:
insurance coverage
provisions for child expenses
investing and mortgage considerations.
Individuals with family incomes of more
than $100,000 annually site tax planning as the most important
element of a plan
The primary reasons that
cause Canadians to develop a financial plan are:
to make retirement provisions,
to allow them to accomplish life
goals
and to help pay child-rearing and
educational expenses.
Canadians think about financial
planning when they reach certain milestones in their lives.
These milestones are:
when they have children
when their marital status changes
when they buy a house
Canadians consider three
factors when deciding if their financial plan is successful
and working for them. They are, in order of priority:
the rate of return on the underlying
investments,
closely followed by whether or not
they feel that they are in control of their financial
future
and the extent to which they feel
they are on track in achieving life goals.
How important is financial planning to Canadians?
Most Canadians think that having a will (one
element considered in a financial plan) is only a little
more important than having a written financial plan.
72 % say having a written financial plan is
somewhat to very important.
However, only 40.6% say they have a plan.
And this figure drops to 30 % when self-developed
plans are excluded.
49 % of the survey respondents now use the
services of someone in the financial industry (from full
service planning firms, banks and trust companies, brokerages,
insurance companies, accounting and law firms, etc.) to
help them manage and structure their personal finances.
This ranges from a low of 28% for families earning less
than $30,000 to 64% for those earning over $100,000 per
year.
Similar to the pattern of using a financial
planner, the percentage of those who say they have a financial
plan varies significantly by family income.
23% of families earning less than $30,000 have a plan.
50 % of families earning $100,000 per year have a
plan.
Of those individuals who are not currently
using the services of someone in the financial industry,
19 % intend to within the next year.
To whom do Canadians go for financial
planning advice and what do they know about them?
Of the 40% of the respondents who say they have a written
plan.
32% had their plan prepared by a professional from
a financial planning firm
15% used one from a bank
11% used a stockbroker
25% wrote their own financial plan.
68 % of respondents feel that their planners have planning
designations, but 77% don't know what they are.
While few Canadians know the different planning designations,
most (77%) feel that it is an important requirement for
financial planners.
Most Canadians select their financial planner based on
suggestions from a friend and secondly by asking another
professional.
Two-thirds of those who use planners say they know how
their planner is compensated, but the incidence of awareness
varies depending on the planner used: ones from a planning
firm (78.6%); brokerage firm (74.7 %); banking and trust
community (45.7%), all other types (54.8%).
What planning services do Canadians want
and how do they rate the ones they get?
Canadians believe the easiest way financial planners can improve their value
to the public is to explain financial planning and investing clearly. Planners
do score quite highly in this area and Canadians want them to continue the
good work.
Canadians give their planners a high overall satisfaction rating.
Planners are given an overall 8.9 satisfaction rating on a 10-point
scale where 10 was "very satisfied".
Their strengths are seen as their ability to explain things, their responsiveness
and their ability to understand clients' goals.
They are believed to be weaker in the areas of frequency of contact
and providing independent unbiased advice
Canadians consider three factors when deciding if their financial plan is
successful and working for them. They are, in order of priority:
the rate of return on the underlying investments,
closely followed by whether or not they feel that they are in control
of their financial future
and the extent to which they feel they are on track in achieving life
goals.
Canadians give their financial plans a slightly lower satisfaction rating
of 8.3 than their planners.
The key strengths of financial plans are that they match people's comfort
levels, cover all areas and address individual goals.
The satisfaction rating is pulled down by the rate of return on investments
and to a lesser extent, identifying how to save.
Most respondents give relatively low ratings for the rate of return
their plan generates; this does not translate into a low satisfaction
rating for the planner.
Most Canadians use financial planning services that include implementation.
Only 16% want their planner to simply develop a plan, while 7% only
want help implementing it.
77% want both the design and implementation help indicating
that Canadians want both planning and on-going advice bundled together
as an integrated service.
CFP®, CERTIFIED FINANCIAL PLANNER® and are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planners Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB.
are certification marks