Financial planning report card: Planners - Good, Canadians - Needs Improvement

November 24, 1999, Toronto - Having a written financial plan is almost as important to Canadians as having a written will. But, do they know that estate planning is just one component of a comprehensive and often complex financial planning process? Most don't, according to a recent study.

Financial Planners Standards Council (FPSC) asked Hart and Associates, an independent management consulting and market research firm, to conduct a survey of 750 Canadians to find out what financial planning means to them.

More than half of those surveyed say they are either currently using or planning to use services of individuals in various segments of the financial industry to help them manage and structure their financial affairs. And 72 per cent believe it is important to have a written plan. But only 40 per cent said they have one - a percentage that drops to 30 when self-developed plans are excluded.

"Many Canadians understand the importance of financial planning to their future, but clearly too many are not yet aware of all the various elements that should be a part of an ongoing planning process nor to whom they can turn for help," says FPSC President Don Johnston.

The survey indicates that those individuals who have plans professionally prepared for them are generally satisfied with the quality of service they get from their planners.

"But there is always room for improvement. The results suggest that more than anything else, people want their planners to help them understand the process they are being led through and why each decision makes sense for them," says Johnston. "It's a very important message for planners. As does much of the survey findings, this confirms for us that the public wants and needs information that will help them understand what financial planning is all about."

To assist Canadians in their search for information about financial planning FPSC has developed a new website at www.cfp-ca.org. It provides information on the planning process and what people should expect from a qualified professional. "For someone considering financial planning for the first time, or for those who want to know more about the qualifications of a Certified Financial Planner licensee, our site is a very good place to start," says Johnston. "If they're looking for a professional financial planner, they can begin by searching our database of CFP licensees on the site".

Some of the other key findings of the survey are:

* Most people associate financial planning with retirement planning, ensuring their financial security, saving and investing. By professional standards, these are some of the basic elements, but not all of them.
* The top three reasons why Canadians think financial planning is important are: to meet retirement needs (57 %), to accomplish life goals (42 %), and to provide for the education and upbringing of children (26 %)
* People think about financial planning when: they change marital status, have children, buy a house and plan for their retirement years
* When asked how they would go about selecting someone to help them manage and structure their financial affairs, 68 % said they would ask a friend.
* Most people (77 %) feel it is important that the individual to whom they turn for financial planning advice holds a professional financial planning designation.
* People feel they get the most objective financial planning services from investment counsellors, financial planners and accountants.
* Those who have professionally prepared plans are slightly less satisfied with them than with the planners who prepared them. They feel the key strengths of their plans are that they match their comfort level, cover all areas and address individual goals. Generally, they judge the plan's overall success by the rate of return on underlying investments, closely followed by the plan's ability to make them feel in control and on track in achieving their life goals.
* The planners most commonly used to help develop plans come from full service financial planning community (32 %); the banking and trust community (15 %); and brokerage firms (11 %).
* Two- thirds of the respondents with planners believe theirs have professional planning designations, but very few know what the designations are.
* Of those using professional services: 77 % use services including both the design and implementation of the plan; 69 % say their plans were originally developed more than three years ago; and 83 % say their plans are reviewed at least once a year.
* Two-thirds of those who use planners say they know how they are 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%).

The survey results are considered accurate within plus or minus 3.5 per cent, 19 times out of 20. The complete survey report is available on FPSC's website (www.cfp-ca.org). FPSC is a not-for-profit professional regulatory organization founded in 1995 to benefit the public and financial planning profession by establishing and enforcing standards for individuals who choose to earn the Certified Financial Planner (CFP) designation. It is the Canadian licensor of the CFP certification marks used by 50,000 planners in 12 countries around the world. There are currently more than 10,000 planners licensed to use these marks in Canada.

For further information, contact:

Douglas Hart
Hart and Associates
416.363.4598