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THE VALUE OFFINANCIAL PLANNING

PRESIDENT’S MESSAGE“Having a comprehensivefinancial plan with the guidanceof a CFP professional canprovide a road map towardsgreater financial and emotionalwell-being. We urge Canadiansto take control of their financesby talking to a CFP professionalabout their goals and financialplanning needs.”Cary ListPresident & CEO, FPSC

Financial Planning Standards Council’s (FPSC )purpose is to instil confidence in the financialplanning profession by establishing, enforcingand promoting appropriately high standards forfinancial planners in Canada. We are concernedthat many Canadians are not receiving thefinancial planning help they need. We believe thatwhen Canadians engage in financial planningwith a qualified practitioner, their emotional andfinancial well-being will improve.We decided to test this theory by embarking on athree-year journey that involved the participationof almost 15,000 Canadians across the country.The three-year longitudinal study was designedto evaluate and better understand the valueproposition of financial planning. To ensurestatistically valid representation, our participantswere from various financial brackets – not onlythose reporting a high net worth but also thosewith very moderate incomes.We wanted to determine if there were markeddifferences in professed well-being betweenthose who have a comprehensive financial planas opposed to those who have received limited,targeted advice (such as tax planning, retirementplanning, etc.) and also compared to those whohave received no professional planning advice.As well, we wanted to quantify the impactof financial planning services offered byprofessionals who hold our Certified FinancialPlanner /CFP designation compared tonon-certified financial advisors.We are grateful to our partners, the FPSCFoundation who provided financial support tothis important undertaking and to The StrategicCounsel who conducted the research studyon our behalf. It is my sincere desire that thefindings from this report effectively encouragemore Canadians to engage in financial planning,increasing their emotional and financialwell-being. I would urge Canadians from allsocioeconomic backgrounds to seek out a CFPprofessional who can assist them in identifyingand realizing their goals.The following provides a summary of thefindings, I’m delighted to report that three yearsof empirical research clearly and consistentlyrevealed that regardless of net worth:Cary ListThose Canadians who engage incomprehensive financial planning witha CFP professional confirm significantlyhigher levels of financial and emotionalwell-being.President & CEOFinancial Planning Standards CouncilCary List, CPA, CA, CFP , is President and CEO of FPSC.Cary oversees CFP certification and has spent most of the pastdecade elevating the standards of the designation and workingfor recognition of financial planning as a distinct profession.

THE VALUE OF FINANCIALPLANNING STUDYThe focus of the Value of Financial Planningstudy was to provide a comprehensive evaluationof financial planning activities undertaken byCanadians, and to measure the impact of financialplanning on Canadians’ emotional and financialwell-being. This pioneering longitudinal researchinitiative was the first of its kind in Canada. Closeto 15,000 surveys were conducted over a threeyear period.1Survey respondents included Canadians fromdifferent socioeconomic backgrounds whoengaged in various degrees of financial planning.For the purposes of this study, financial planningwas defined as follows: Comprehensive Planning (CP): The mainfinancial advisor has provided financial planningfor major life goals and events, or at leastthree of the planning components: householdbudgeting, tax, retirement, estate planning,investing, debt or risk management. Limited Planning (LP): The main financialadvisor has provided advice or services relatedto one or two of the planning components. No Planning (NP): There has been no helpobtained from a financial advisor, regardless ofthe situation.The complexity of the study called for extremerigour to be exercised in the design andimplementation of the research. Questionnairedevelopment started in January 2009 withqualitative focus group discussions conductedamong financial planners and consumers.Insights gained from these group discussionshelped to define areas of inquiry and to formquestions in clear language consumers couldeasily understand.1Surveys were conducted from August 2009 – August 2012.The research surveys the general English-speaking populationin Canada (excluding Quebec). The results listed are from thethird year of research, conducted from April – August 2012.Value of Financial PlanningStudy Objectives1.To measure the impact offinancial planning in three distinctways: emotional, tangible, andquantifiable;2.To quantify the impact of financialplanning services offered byCertified Financial Planner /CFP professionals2 comparedto non-certified advisors;3.To determine whether thereare differences in the impact ofcomprehensive financial planscompared to targeted specificadvice.2In order to confirm the CFP certification statusof advisors, the credentials reported by surveyrespondents were verified with the FPSC database.

RESULTSCanadians who engage in comprehensivefinancial planning report significantly higherlevels of financial and emotional well-being thanthose who do no planning or limited planning.Those with comprehensive plans feel theirfinancial goals and retirement plans are moreon track; their ability to save has improved inthe past five years; and they are more confidentthey can handle the inevitable bumps in life.1On Track with Financial AffairsThose with comprehensive financial plans (CP) are substantivelymore likely to report feeling on track with their financial affairscompared with those who do no planning (NP) or only limitedplanning (LP).Feel on track with their financial affairs:While planning for the future is important, thosewith comprehensive financial plans are also moreable to fulfill their discretionary spending goals.Canadians who engage Certified FinancialPlanner /CFP professionals for their financialplanning needs appear to have an extra edgein terms of the value and benefits they obtainfrom financial planning compared with thosewho engage non-certified advisors.81% (CP)73% (LP)44% (NP)(CP) comprehensive planning (LP) limited planinng (NP) no planning

“Because of financial planning,I worry less about money”(63% agree if planner is CFP professionalvs. 53% non-certified advisor)23On Track to RetireOn Track to SaveThose who have comprehensive financial plans(CP) and cite retirement as an important goal feelmore confident in their plans to retire.Those who have comprehensive financial plans(CP) are more likely to report that they haveimproved their ability to save in the last five years.Feel on track to retire when they want to:Feel on track to continue saving:50% (CP)62% (CP)39% (LP)22%(NP)56% (LP)40% (NP)

Can Deal with Bumps in LifeThose who have comprehensive financial plans are more confident that they are prepared to dealwith the challenges and bumps in life, such as unexpected financial emergencies, tough economictimes, and ensuring loved ones are financially looked after if something should happen to them.))(NP%41)(CP) comprehensive planning (LP) limited planinng (NP) no planning)(LP%(CP%65)(LP%%(NP%Loved ones lookedafter in the eventof their :%%28Unexpectedfinancialemergencies:)Prepared to deal with:604

“Because of financial planning,my family will be looked after ifanything happens to me”(60% agree if planner is CFP professionalvs. 53% non-certified advisors)

“Financial planning has helpedme have greater peace of mind”(73% agree if planner is CFP professionalvs. 63% non-certified advisor)5Can Live Life TodayWhile saving for the future is crucial, it’s also necessary to consider today’s needs and desires. Compared tothose who have not engaged in planning, those who do engage in comprehensive planning feel more confidentin reaching the discretionary goals they identified as important.Annualvacation:Enough moneyto live the lifethey want:44% (NP)74% (CP)Money forsplurges:31% (NP)31% (NP)61% (CP)(CP) comprehensive planning (LP) limited planinng (NP) no planning65% (CP)

6A Stronger Sense of Well-BeingThose individuals who engage in comprehensiveplanning (CP) report higher levels of emotional,financial and overall contentment over those whohave engaged in limited planning (LP):Achievementof life Emotionalwell-being:85%better off62%better off79%better off45%better off

WHAT DIFFERENCE DOESA CFP PROFESSIONAL MAKE? Working with a CFP ProfessionalMakes a Meaningful Differenceto CanadiansCanadians who work with a CFP professional aremore likely to report benefits from planning thanthose who engage non-certified advisors for theirfinancial planning needs.CFP certification is the industry gold standardin financial planning. CFP professionals are thelargest group of financial planners in Canada withover 17,500 who meet and adhere to the strictstandards of this designation.The Difference a CFP Professional can Make: Canadians who work with a CFP professional are more likely to report their financialaffairs are on track than those dealing with non-certified planners (78% vs. 54%). More Canadians who are using a CFP professional believe that financial planning hashelped them have greater peace of mind than those working with a non-certified planner(73% vs. 63%). More Canadians who engage a CFP professional believe they are closer to achievingsome of their life goals as a result of planning than those working with non-certifiedplanners (70% vs. 61%). Canadians spend 36% more time with their CFP professional than those workingwith a non-certified professional. CFP professionals continue to have longer-term relationships with their clients(average of 6.2 years) than non-certified professionals (average of 4.6 years).

MOVING FORWARDMeasuring the Societal Impactof Financial PlanningFPSC believes we have a responsibility to sharewhat we have learned, and to that end wewill be distributing this report across Canada.We sincerely hope these lessons will inspireCanadians to engage a Certified FinancialPlanner /CFP professional in the developmentof a comprehensive financial plan. The powerto act and to make a positive change towardsemotional and financial well-being starts witha comprehensive financial plan.The Value of Financial Planning study is thefirst step in understanding the emotional andfinancial value Canadians have realized throughfinancial planning with a CFP professional.We now know that there is a strong positivecorrelation between comprehensive planningwith a CFP professional and an individual’sperceived emotional and financial well-being.The next step is to measure the actual valueof this benefit and its impact on society.FPSC has passed the findings of this studyover to the FPSC Foundation, and they willbe actively working to determine the mostappropriate research methodology requiredto get to the heart of this question.We as a society, understand how closely ourfinancial goals are to our life goals, but neverbefore has there been an in-depth investigationundertaken in Canada to define those measures,and to quantify them.What impact does financial planning have ona society? How does an individuals’ financialplan (or lack thereof) impact productivity atwork, emotional stress, physical health, andtheir relationships? What is the social returnon investment of financial planning? Togetherin partnership with the FPSC Foundation,we aim to find out.