The Value of Financial Advice

Result - Individuals without Financial Plans are being left behind by those who have engaged in comprehensive financial planning

Toronto, June 16, 2010 — Canadians who have engaged in comprehensive, integrated financial planning are significantly more optimistic about their personal wellbeing as compared with those who have not. Individuals with comprehensive, integrated plans feel better prepared to deal with financial emergencies and manage through difficult economic times, and are more confident about reaching a wide spectrum of life goals. Furthermore, there is measureable proof that those who have engaged advisors for only piece-meal, "as needed" financial advice are being left behind by Canadians engaged in comprehensive, integrated planning.

These are just some of the findings of the Value of Financial Planning study,
which was conducted by The Strategic Counsel and commissioned by Financial Planning Standards Council (FPSC). The first phase of this five year study was conducted during one of the most difficult economic periods in Canada's recent history (between August 7, 2009 and January 21, 2010).

The study defined 'comprehensive, integrated financial planning' as that in which one's main financial advisor has provided financial planning for major life goals and events, or at least three of the following planning components: household budgeting, tax, retirement, estate planning, investing, debt or risk management. 'Limited financial advice' was defined as engaging in just one or two of the aforementioned components.

"Never before has there been such concrete, empirical evidence confirming the
value proposition of comprehensive, integrated financial planning, and its impact on people's confidence in achieving life goals and managing through difficult times," says Cary List, President & CEO of FPSC. "These results further underscore how comprehensive, integrated financial planning is salient for one's financial and emotional wellbeing — not just in the good times, but particularly through the tougher times, "says List.

"Financial planning is about putting financial strategies in place to help you manage your finances to achieve a wide spectrum of life goals in both the near- and long-term. Undertaking ad hoc, or limited financial advice, while clearly better than nothing, just doesn't have the same impact as taking a comprehensive view of how to best manage one's finances to meet your life goals. And those who are doing no planning at all are being left far behind," says List.

The research also revealed that 61 per cent of individuals who engaged in comprehensive, integrated financial planning felt confident that they will be satisfied with their financial situation in retirement, as compared with 27 per cent with no financial planning and 46 per cent who had engaged in only limited advice.

Long-term Financial Wellbeing
% of people who agree with the following statements:

Emotional Wellbeing:

Achieving Key Life Goals:
Question asked among those identifying the goal as important: And how close are you to achieving each of the goals you have identified as important? The responses below reflect respondents who answered 'close' (to varying degrees)

Canadians and Their Advisors:
The results also indicated that advisors who provide comprehensive, integrated financial planning have stronger relationships, characterized by higher levels of engagement, with their clients, compared to those advisors providing limited financial advice. Advisors who provide comprehensive, integrated planning tend to have longer-standing relationships with their clients, meet more frequently, and spend more time reviewing and making changes to their plan.

About the Value of Financial Planning Study:

Conducted by The Strategic Counsel, the research surveyed the general English-speaking population in Canada (excluding Quebec) between August 7, 2009 and January 21, 2010. It was done through a national online panel of 7,383 respondents. The study results have been analyzed separately for varying net worth categories (i.e. < $100k; $100k-$350k; $350-$600k; $600k>) and designed to eliminate net worth as an influencing variable while evaluating the impact of financial planning.