Canadian Study Finds Having a Financial Plan Yields Greater Savings and Security
Research conducted recently in Canada lends evidence that utilizing a financial planner to aid in the development and enactment of your financial plan does yield substantive benefit.
The study, ordered by the Financial Planning Standards Council (FPSC), found that of the 20 per cent, or less, Canadians who actually employ a financial planning strategy, virtually all state that doing so has affected an increased ability to save, and an improved sense of security and lifestyle comfort.
“Those with comprehensive financial plans are saving more proactively for the things that matter to them,” Cary List, president and CEO of FPSC, says. “[Planners] are reporting much higher levels of confidence in dealing with life’s uncertainties and in reaching their financial and life goals.”
Research was collected by the Strategic Counsel from August, 2009 to January, 2010 using information from more than 7,000 Canadians of various financial backgrounds. The study defined ‘comprehensive financial planning’ as planning provided by a focal advisor that factors key goals, or any three of the following, into a financial strategy:
- household budget
- saving for retirement
- planning one’s estate
- managing debt
- negotiating risks
Research contributors who said they do use comprehensive financial planning also said that they routinely set aside funds allocated to both short and long-term objectives, such as:
- children’s education
- property expenses
- travel and recreation
- emergency resources
- paying down debt
- preparing for retirement
Nearly 60 per cent of these contributors said that over the last five years they saw a marked improvement in their saving capabilities and felt greater peace of mind, while 70 per cent said they were closer to achieving their goals. Only 37 per cent of those contributors that do not financially plan said they experienced a noticeable increase in their ability to save over the last five years.
“As Canadians’ debt levels soar, a minority is proving that financial planning can make an enormous difference in one’s life,” List states.
Those that plan their financial futures also tend to invest in a broader array of investment products. The study found that of those respondents with financial plans:
- 80 per cent have an RRSP (Registered Retirement Savings Plan) vs. 35 per cent for those without
- 43 per sent have a TFSA (Tax-Free Savings Account) vs. 15 per cent for those without
- 26 per cent have an RRIF (Registered Retirement Income Fund) vs. 6 per cent for those without
The FPSC released this study, entitled the Value of Financial Planning in time for Canada’s Financial Planning Week, October 4 to 10, in hope to encourage Canadians to implement financial planning into their everyday routines.
“There’s no better time than now for Canadians to commit to developing a more financially secure future,” List says.