Those with a comprehensive plan are twice as likely to report feeling confident in their financial future according to a Financial Planning Association and Ameriprise Financial study DENVER, Oct. 6
DENVER, Oct. 6 /PRNewswire/ -- A recent study found that nearly nine out
of 10 respondents (88 percent) with a comprehensive financial plan feel they
have a clear financial direction, a number nearly 50 percent higher than those
without professional support. This finding is according to the Value of
Financial Planning study released today by the Financial Planning
Association(R) (FPA(R)) and Ameriprise Financial (NYSE: AMP). The same study
found that those with a financial planner and a comprehensive plan are 50
percent more likely to feel their goals are financially secure as compared to
those without a professional financial planner (75% versus 49%).
"The Value of Financial Planning study shows a clear difference between
those who have a comprehensive plan and relationship with a financial planner
versus those who do not," said Jim Barnash, CFP(R), national director of
Financial Planning, Ameriprise Financial. "Although conducted prior to recent
events, the findings show that those with a comprehensive planning
relationship feel more in control of their financial future and believe they
are more prepared for the unexpected. This outlook keeps them focused on long
term goals rather than reacting to market events which is critical during
these difficult economic times."
"Not all financial plans are alike," said FPA president Mark Johannessen,
CFP(R). "A comprehensive financial plan addresses both financial and personal
goals. While some plans focus on a few areas such as investments or
retirement, a comprehensive plan can cover a person's whole financial picture,
including cash flow, investments, retirement, taxes, estate, education and
protection or insurance needs."
The FPA and Ameriprise Value of Financial Planning study was conducted
online by Harris Interactive in the summer (June/July 2008) with 3,022 adults
who had greater than $50,000 in annual income or investable assets.
Respondents fell into three groups:
-- Self-Directed - Those who don't work with a professional financial
planner and haven't paid for advice.
-- Advice-Supported - Those who work with a paid professional but do not
have a comprehensive written plan.
-- Comprehensive Planning Participants - Those who are actively engaged in
the financial planning process through an ongoing relationship with a paid
professional financial planner and a written, comprehensive plan that covers a
minimum of three key aspects of their financial life which they review
regularly.
Economy is a concern, but some taking positive action
While most respondents believe the economy is on the wrong track,
respondents with a comprehensive planning relationship were more likely to
report taking action such as rebalancing portfolios. This may be due in part
to the finding that those who have a financial planner and comprehensive plan
feel they have a better understanding of financial issues compared to those
who are self-directed (71% versus 62%).
-- Those with a comprehensive financial plan are more than twice as likely
to report they have taken actions such as rebalancing their portfolio (42%)
and investing in low-priced stocks (15%) than those who are self-directed (16%
and 10% respectively).
-- More than half of baby boomers (51%) with a comprehensive plan indicate
having rebalanced their portfolio in the past year - this is three times more
than those who are self-directed baby boomers (16%).
Retirement is motivator for financial advice
More than half of those with a financial planner cite planning for
retirement as the trigger to seek professional advice. Approximately half of
all respondents report participating in their company-sponsored retirement
plan. However, comprehensive planning participants report more active planning
for retirement than those without a plan.
-- Almost half of respondents with a comprehensive plan (46%) report
regularly saving the amount needed to meet their financial needs in retirement
as compared to only 25 percent without a plan.
-- While over half of all non-retired respondents report participating in
their company-sponsored retirement plan, 67 percent of those with a
comprehensive plan say they have also invested in non-company sponsored
investment products such as an IRA, 401k or SEP as compared to only 39% of
those who are self directed.
-- Comprehensive planning participants are more than twice as likely as
those who are self directed to indicate they have estimated the amount of
annual income needed in retirement (63% versus 29%).
"Just as each retirement dream is unique, so is the amount of money needed
to finance it," said Barnash. "A professional advisor can help estimate needs
and keep a person on track to reach their goals. In fact, the Value of
Financial Planning study found that those with a comprehensive plan are 50
percent more likely to feel well prepared for retirement than those without a
planning relationship."
Savings still a priority
Despite low savings rates in America, more than half of those surveyed
reported that they have an emergency fund. Of those who have an emergency fund
the majority report having six months or more of living expenses saved.
Overall, the majority of comprehensive planning participants make savings more
of a priority than those without a plan.
-- More than two thirds (67%) of comprehensive planning participants
reported annual savings of at least 8 percent of their gross income compared
to less than half (45 percent) of those who are self-directed.
-- While over half (53%) of comprehensive planning participants say they
are on track to achieve their education savings goals, less than one third
(29%) of those who are self directed say this.
-- Those with a comprehensive plan are nearly 10 times as likely to report
having college savings included in their plans than those who work with a
planner but don't have a comprehensive plan (29% versus 3%).
-- Seventy-three percent of comprehensive planning participants report
they have improved their ability to save versus five years ago compared to 58
percent of those who have a planner but don't have a comprehensive plan.
Protection gap between planners and non-planners
The value of a comprehensive financial plan becomes especially clear in
the area of protection and preparedness.
-- Eighty-two percent of comprehensive planning participants report
feeling that their families will be cared for in the event of an emergency
followed by the advice-supported at 72 percent. Only 58 percent of the
self-directed agreed with that statement.
-- More than half of Boomers (54%) who are comprehensive planning
participants say their plan covers estate planning while only a quarter (25%)
of those who are self-directed have an estate plan.
-- Gen Xers who are comprehensive planning participants are twice as
likely (60% versus 27%) as those who are self directed to report being on
track with saving for education.
Johannessen said: "Too many people look at spending for today rather than
saving or protecting themselves for tomorrow. This short-term view can have a
huge impact on future finances if they don't plan ahead."
About the Value of Financial Planning study
FPA(R) and Ameriprise(R) Value of Financial Planning study conducted by
Harris Interactive, August 2008
The Financial Planning Association (FPA) and Ameriprise Value of Financial
Planning Study: Consumer Attitudes and Behaviors in a Changing Economy, was
conducted online within the United States by Harris Interactive on behalf of
the Financial Planning Association and Ameriprise Financial between June 27
and July 18, 2008 among 3,022 adults with greater than $50,000 in annual
income or investable assets. While market volatility was significant during
the study period, the dramatic financial developments later in the year, which
may have affected attitudes and behaviors reflected in this report, had not
yet occurred. No estimates of theoretical sampling error can be calculated; a
full methodology is available.
About the Financial Planning Association
The Financial Planning Association(R) (FPA(R)) is the leadership and
advocacy organization connecting those who provide, support and benefit from
professional financial planning. Based in Denver, CO and Washington, DC, FPA
demonstrates and supports a professional commitment to education and a
client-centered financial planning process. Based in Denver, Colo., FPA has
close to 100 chapters throughout the country representing more than 29,500
members involved in all facets of providing financial planning services.
Working in alliance with academic leaders, legislative and regulatory bodies,
financial services firms and consumer interest organizations, FPA is the
community that fosters the value of financial planning and advances the
financial planning profession. For more information about FPA, visit
www.FPAnet.org or call 800.322.4237.
About Ameriprise Financial
Ameriprise Financial, Inc. is a diversified financial services company
serving the comprehensive financial planning needs of the mass affluent and
affluent. For more information, visit ameriprise.com .
About Harris Interactive
Harris Interactive is a global leader in custom market research. With a
long and rich history in multimodal research that is powered by our science
and technology, we assist clients in achieving business results. Harris
Interactive serves clients globally through our North American, European and
Asian offices and a network of independent market research firms. For more
information, please visit www.harrisinteractive.com .
Brokerage, investment, and financial advisory services made available through
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
The Financial Planning Association is the owner of trademark, service mark and
collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING
ASSOCIATION. The marks may not be used without written permission from the
Financial Planning Association.
CFP(R), CERTIFIED FINANCIAL PLANNER(TM) and the federally registered CFP (with
flame logo) are certification marks owned by Certified Financial Planner Board
of Standards, Inc. These marks are awarded to individuals who successfully
complete CFP Board's initial and ongoing certification requirements.
SOURCE Financial Planning Association
