Surveys
INTRODUCTION
This survey was conducted by telephone (using a CATI system) with a representative sample of 750 English Canadians, 18 to 75 years of age. At the conclusion of the study, data was then weighted within each region by age and gender, based on Statistics Canada information from 2001.
Those interviewed were primarily or jointly responsible for making some or all of the financial and investing decisions for themselves or their household. In addition, in order to qualify for the survey, each person had either a savings account or other type of investment.
Standard security questions were asked to exclude those employed in the financial services industry as well as those working in marketing or marketing research. Fieldwork was completed from April 29 to May 14, 2003. The questionnaire was 22 minutes in length.
A copy of the questionnaire is appended. Detailed tabulations are available and have been provided in hard copy to Financial Planners Standards Council. Wave II was designed to be fairly comparable to Wave I and, therefore, the results can be legitimately compared with each other. Where there are differences between the two studies, these have been noted in the report.
Based on the total sample of 750, the margin of error at the 95% level of confidence is ± 3.5%.
A. What is the financial profile and perspective of Canadians?
B. How important is seeking the advice of financial professionals to Canadians?
C. What do Canadians know about the financial planning sector?
D. To whom do Canadians go for financial advice and what do they know about them?
E. What does financial planning mean to Canadians?
F. How important is Financial Planning to Canadians?
G. How are financial planning services paid for by Canadians?
H. How do Canadians rate their financial professional and the services they offer?
I. How do Canadians rate their financial plans?
Summary of Key Findings
A. What is the financial profile and perspective of Canadians?
- In 2003, the average net worth for adult Canadians was $235,400 and the proportion of those with an RRSP was 69%. Ownership of investments outside the RRSP was lower at 53%.
What has changed since 1999?
- In 2003 the average net worth was lower than in 1999 ($235,400 versus $282,000), the percentage of Canadians with an RRSP was lower (69% versus 74%) and the percentage of those with investments outside an RRSP was also lower in 2003 (53% versus 59%).
- These shifts may reflect respondents' reactions to recent diminishing investment returns related to the overall decline in the stock markets around the world over the past several years.
- Despite the decline in personal net worth, Canadians remained remarkably optimistic about their own financial future. Two in ten were 'very optimistic' and more than half (52%) were 'somewhat optimistic' about what lies ahead from a personal financial point of view.
- In 2003, there was a high confidence (close to 90%) in 'making decisions about their own financial planning'. This confidence was even higher among those with a written financial plan and among those who used a financial planning firm to develop their plan.
- The confidence in 'making investment decisions' was significantly lower than confidence in 'making decisions about financial planning' (63% versus 89% for 2003). Confidence in 'making investment decisions' was higher among those who used a financial professional and particularly for those who had a written financial plan.
- In 2003, the least confident were younger (18 - 29 years), earned less than $50K and were women.
What has changed since 1999?
- Confidence in 'making investment decisions' was higher in 1999 (69%) than today (63%).
B. How important is seeking the advice of financial professionals to Canadians?
- In 2003, the proportion of Canadians who had ever used a financial professional was 53% while 39% currently use one. The incidence of using a financial professional continued to increase with age, particularly for those 50 years or older (44%) as well as with respondents' household income (64% for $100,000 or more in annual income).
What has changed since 1999?
- In 2003 fewer Canadians claimed they had ever used a financial professional than in 1999 (53% versus 60%) and fewer were currently using one (39% versus 49%).
- From 1999 to 2003, there was a significant increase among respondents 18 - 29 years who currently used a financial professional (8% to 16%). At the same time, a decrease in current use of a financial professional occurred for those 40 - 49 years (32% in 1999 to 25% in 2003).
Who uses or are likely to use financial professionals?
- The following describes those Canadians who are most likely to state that good financial planning is important to their future well-being:
- women
- divorced/widowed/separated persons
- middle-aged people, 40 - 59 years
- those with incomes from $75,999 t0 $99,999
- those with total assets of $250,000 to $499,999
- those currently using a financial professional
- those with a written plan
- those using a financial planning firm or a broker
Who do not use or are not likely to use financial
professionals and why?
- Those who had never used a financial professional were younger (under 30 years), had lower household incomes (under $30,000) and a lower net worth (under $100,000). Among this group, the two main reasons for not using a financial professional to manage their financial affairs were lack of need (29%) and the belief they were knowledgeable enough to manage their own affairs (28%).
- In 2003, the most frequently given reasons for discontinuing to use their financial professional were lack of need for this service (19%) and poor service or advice (18%) received from a financial professional in the past. In addition, some had used a professional just to set up the financial plan and then discontinued this relationship with this financial professional (11%).
What motivates Canadians to seek professional financial
advice?
- In 2003, among those who had never and were not currently using a financial professional, 16% planned to start using one in the next year. There were three motivating factors that made respondents consider using a financial professional in the future. These were:
- thinking about retirement - (14%)
- need for advice - (13%)
- insecure about the future - (12%).
C. What do Canadians know about the financial planning sector?
- In 2003, the majority of Canadians are aware that financial planning is provided by:
- financial planning firms (85%)
- banks (89%)
- mutual fund companies (74%)
- insurance companies (59%).
What has changed since 1999?
- There were substantial increases in awareness of four providers of financial planning. In 1999, 69% of respondents were aware that financial planning firms were providers of financial planning services, 72% cited banks, 57% said mutual fund companies and 39% mentioned insurance companies as compared with the 2003 percentages noted above.
- In 2003, two-thirds (63%) of all Canadians believed that financial planners or those doing financial planning professionally were regulated or licensed in Canada. One in five (20%) had no idea if they were licensed and the remainder (17%) said they were not regulated or licensed.
- In 2003, 78% of respondents who used a financial professional said this person had a financial planning designation. However, the majority (69%) of these respondents claimed they had no idea what designation was held.
What has changed since 1999?
- In 2003, more respondents (78%) claimed their financial professional had a financial planning designation than in 1999 (68%).
- Among those who believed their current financial professional had a financial planning designation, CFP was the most often cited designation in 2003 (16 %) with the next most often cited designations (Financial Planner and PFP) mentioned by 2.3% and 2.2% respectively.
- Among all respondents, awareness of the CFP as a financial planning designation was 10% in 2003 - a recognition that was by far the highest of all designations on an unaided basis, the next (PFP) trailing at 1.5%.
- Even though many respondents were unaware if their financial professional had a professional designation and what this was, 74% indicated it was very important to have this designation.
- On an unaided basis in 2003, 3% of Canadians were aware that FPSC licensed or granted the CFP or certified financial planner credential. An additional 15% were aware on an aided basis, bringing total awareness to 18%. Government was named as a licensor or regulator by 4% of respondents, but a large majority (86%) had no idea which organization granted licenses to financial planners.
- Claimed advertising awareness about the CFP was 22% among all respondents, with higher awareness for those who used a financial professional (27%) and among those with a written plan (28%).
- Most (42%) claimed to have recalled CFP television advertisements, followed by newspaper ads (37%) and magazines ads (18%). Awareness of a CFP website was quite limited - 5% on an aided basis, with most of the awareness resulting from either a web-based search or hearing about the site through friends and family members.
D. To whom do Canadians go for financial advice and what do they know about them?
- In 2003, the two primary financial professionals currently used most often were the individuals from financial planning firms or independent planner (used by 33%) and an advisor at a bank, trust company or credit union (used by 26%). Seven percent (7%) said they used an accountant as their financial professional in 2003.
What has changed since 1999?
- Using an accountant for financial planning was less prevalent in 2003 than in 1999 (7% versus 14%).
- In 2003, a significant proportion of those with financial plans had prepared it themselves (19%). However, respondents were most likely to have used a financial planning firm or an independent planner (29%) to help them develop their plan. Using a friend or family member was 24%, while the usage of banks, trust companies and credit unions was 12% in 2003.
What has changed since 1999?
- In 1999, more Canadians prepared financial plans themselves (25%). There were more who used a financial planning firm or independent planner (32%) in 1999 but using a friend or family member was significantly lower in 1999 (4%) than currently (24%).
- Currently, financial planning firms played the major role for those who had help with the plan only and for those who had a professional design the plan and select or manage their investments. Banks, trust companies and credit unions were most likely to be involved in implementing the plan only.
- In 2003, if asked to look for a financial planner, most (71%) would ask a friend followed by those who would ask another professional (65%).
What has changed since 1999?
- Using the Internet to search for a financial planner was significantly lower in 1999 (20% versus 30% in 2003). In addition, fewer would call a planning company in 1999 (24% versus 32% now).
- About four in ten respondents (40%) in 2003 who used a financial professional, asked a friend for a recommendation. Second to this was asking another professional but at a much lower level (15% in 2003).
- In 2003, 18% 'do it themselves' when it came to buying and selling investments directly and 10% used no one for advice.
What has changed since 1999?
- In 2003, more Canadians (18% versus 12% in 1999) bypassed intermediaries and bought and sold their own investments; and fewer (10% versus 27% in 1999) said they sought no one's advice in making investment decisions.
E. What does financial planning mean to Canadians?
- On an unaided basis, most respondents associated 'financial planning' with retirement planning, savings/investing and ensuring their own financial security. These were the top three associations in 2003. Security ranked fourth and was named by 13% of Canadians.
What has changed since 1999?
- In 2003, retirement was mentioned more often than in 1999 (47% from 33%) and financial security was named less often (13% from 26% in 1999).
- In 2003, on an aided basis, Canadians cited retirement income forecasts and budgets more than any other elements as key ingredients of a financial plan.
What has changed since 1999?
- Several elements increased in importance for inclusion in the financial plan, from 1999 to 2003. These were:
- types of investments to buy - 73% in 1999 to 82% in 2003
- tax planning - 61% in 1999 to 78% in 2003
- mortgage consideration - 69% in 1999 to 77% in 2003.
- The mean importance ratings for all plan elements, except tax planning, were higher in 2003 than in 1999. Thus, it appears Canadians are more aware of what should be included in a financial plan than in 1999 and/or want their financial plans to be more inclusive now than four years ago.
- The prime reason for developing a financial plan was the need to plan for the future, which mainly included retirement planning (33% in 2003). Other reasons for future planning included 'to accomplish life's goals' (13%) and 'save for children's' or 'my education' (7%).
What has changed since 1999?
- In 2003, fewer Canadians indicated retirement planning was the main reason to develop a financial plan than in 1999 (33% in 2003, from 57% in 1999).
- In 2003, insecurity about a variety of areas such as their own future or investment decisions, motivated developing a plan for one in four (25%) of those who had a plan. In 2003, life-changing events like having children or a change in marital status also led 18% of those with a plan to have one developed in the first place.
What has changed since 1999?
- Insecurity about one's financial future is a new motivating factor for developing a financial plan that has emerged since 1999 when it was not mentioned by respondents.
- In 2003, the most common points in life when respondents saw a need for a financial plan were:
- when having children
- when getting married
- at retirement
- on entering the workforce/graduation.
F. How important is Financial Planning to Canadians?
- The incidence of having a written plan in 2003 was 37%.
What has changed since 1999?
- Somewhat fewer Canadians claimed to have a written plan in 2003 than in 1999 (37% from 41% in 1999).
- There is a significant increase in having a written plan from 1999 to 2003 among respondents 18 - 29 years (10% to 29%) and among those with a lower net worth of under $100,000 (5% to 15%).
- In 2003, the likelihood of having a written plan (37%) increased with age, particularly for those 50 - 59 years (43%) and with higher household incomes (51% for those with an income of $100,000 or more). Those currently with a financial professional were also more likely to have a written plan (58%) than those without a financial professional (24%).
- In 2003, 72% of all respondents said having a written financial plan was very or somewhat important to them. Importance was even higher among those who had a written plan (95%) or who had a financial professional (79%).
- Among respondents who had help developing the plan, the proportion that used a professional to both design the plan and select or manage investments was 38% in 2003.
What has changed since 1999?
- There are significantly fewer Canadians who used a professional to both design the plan and select or manage investments in 2003 than in 1999 (a drop to 38% from 77% in 1999).
- There is also a large increase from 1999 to 2003 in the percentage of Canadians using the financial professional to implement the plan only and keep it on track (7% to 24%).
- Receiving help to only develop the plan was 19% in 2003.
What has changed since 1999?
- There are more Canadians using professionals to develop the plan only than in 1999 (19% versus 16%).
- Although the majority (61%) had the original or current plan prepared more than five years ago, on average, 85% of those with a written plan reviewed it annually or more often. When the plan was developed by a bank, trust company or credit union, the frequency of review was more likely to be annual (69%) rather than more often (20%). Conversely, the cited frequency of plan reviews was greater by respondents who used financial planning firms than of those who dealt with banks, trust companies or credit unions.
- In terms of the ideal use of a financial planner, 27% would not use the services of a planner at all in 2003 and 50% would ideally choose to use a financial planner to prepare both the plan and provide ongoing advice.
What has changed since 1999?
- In 1999, fewer (7%) would not use the services of a financial planner at all and more Canadians (74%) would ideally use a financial planner for preparing both the plan and giving ongoing advice.
- Areas for improving the value of financial planners changed considerably from 1999 to 2003. Currently, being honest and giving unbiased information, along with staying in touch, giving additional information on a regular basis and more personalized service were the key areas suggested. In 1999, Canadians believed explaining things clearly was the main way financial planners could improve their value to the public but this declined in importance to 9% in 2003 from 46% in 1999.
G. How are financial planning services paid for by Canadians?
- When those who claimed to know how their financial professional was paid were asked how they were compensated, commission was the primary method named in 2003. Fifty-three percent (53%) of Canadians said salary was the compensation method, while payment by fees was mentioned by 34%, followed by bonuses at 9%. Since financial professionals sometimes received several forms of compensation, it was interesting to see what proportion of the respondents believed their advisor received only one form of payment. This is shown below:
| In Total (%) | Only (%) |
| Commission | 57 | 36 |
| Salary | 53 | 43 |
| Fees | 34 | 24 |
What has changed since 1999?
- In 1999, more Canadians (66%) said commission was how their financial professional was compensated.
- Among those who had a plan developed, one in ten (11%) paid a separate fee in 2003. About half of those who paid a separate fee for the plan stated the amount was pre-specified, while the remainder was divided between paying an amount based on an hourly rate or paying a percentage of their assets.
What has changed since 1999?
- In 1999, the number of those who claimed they paid a separate fee was higher (16%) than in 2003 (11%).
- In 1999, 47% of the respondents said they would prefer the cost of having a plan developed to be included in commissions paid to the planner for products purchased. Preference for a separate charge was well behind at 32%. Currently, these two methods were liked equally well - 44% for separate fee and 42% included in the cost of purchasing products.
- In 2003, those who currently used a financial professional were more likely to favour payment through the purchase of products (54%) rather than by payment of a separate fee (37%).
- In 2003, the average amount Canadians expected to pay for a financial plan was $650, but many (52%) had no idea what the amount was they expected to pay for this service.
What has changed since 1999?
- In 1999, the average amount Canadians thought they would pay for a financial plan was much lower ($398).
- On average, Canadians were willing to pay much less ($504) for the plan than they expected to be charged ($650). This left a significant gap between expectations and actual dollars they would spend for a financial plan.
H. How do Canadians rate their financial professional and the services they offer?
- In 2003, the prime reason for continuing to use their current financial professional was satisfaction with the job they did (35%). For 16%, overall trust was the driver of loyalty, followed by good investment advice, at 12%. Making money or good returns was mentioned by one in ten (10%) of those who used a financial professional as the reason for staying with this person.
- Overall satisfaction in 2003 with the financial professional remained fairly high at an average of 8.3 out of 10. The single attribute that respondents were most satisfied with was 'responsiveness in returning calls' averaging an 8.9 rating.
What has changed since 1999?
- Satisfaction increased from 1999 to 2003 for 'developing specific approaches to reach life goals' and 'providing specific investment recommendations'. There has been a notable decrease in satisfaction with 'financial professionals explaining things', average ratings falling from 8.9 in 1999 to 8.5 in 2003.
- Canadians were more likely to refer their financial planner to others in 2003 (62%) than in 1999 (52%).
- In 2003, financial planning firms had the highest objectivity mean rating (7.2 out of 10) among all organizations offering this service. Banks and credit unions were rated at 6.3 and 6.2, respectively, but were significantly lower than financial planning firms. All other organizations were at 6.0 or less, indicating possible concerns about their objectivity.
What has changed since 1999?
- From 1999 to 2003, significant declines in mean objectivity scores were seen for accounting firms, mutual fund companies, brokerage firms, insurance companies and law firms.
- Over half (53%) of the respondents believe the advice offered by their professional was objective when the financial professional received a salary. However, less than half were certain the advice was objective if the compensation method was by fees (44%), by commission (38%) or by bonuses (28%).
- In 2003, when it came to advising on buying and selling investments, the bank advisor and the financial planner were rated highest and were on par with each other at about 30%.
I. How do Canadians rate their financial plans?
- In 2003, the two key factors that Canadians considered about equally when deciding if their financial plan was working successfully were:
- the rate of return on investments
- being in control of their financial decisions.
Of somewhat lesser importance was being on track to meet
specific life goals.
- In 2003, the overall mean satisfaction with the plan was 7.9 out of 10, but this is lower than satisfaction with the financial professional (8.3).
What has changed since 1999?
- For all aspects of the plan, satisfaction dropped from 1999 to 2003. The greatest decreases in the mean satisfaction ratings occurred for:
- the rate of return - (-1.5)
- the degree to which the plan helps achieve your goals - (-0.6)
- the plan covers all areas - (-0.5)
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