The Value of Financial Planning

The Financial Planning Standards Council (FPSC) recently released a report on a three-year study that took place between August 2009 and August 2012. It involved almost 15,000 Canadian participants. The objective was to evaluate and gain a better understanding of the value proposition of the financial planning industry and specifically planners with the Certified Financial Planner (CFP) designation.

To ensure valid representation, participants were not only wealthy Canadians but included those from very moderate incomes as well. The study concluded that Canadians who engage in comprehensive financial planning with a CFP confirmed significantly higher levels of financial and emotional well-being.

The study looked at three scenarios: those who engage a professional financial planner for comprehensive planning, those who engage a financial planner for limited planning, and those who do not engage financial advice at all.

A comprehensive financial plan involves six steps. The first step is to clarify your current financial position. Step two involves identification of personal and financial goals and objectives. The third step is to identify financial problems and opportunities. The fourth step involves delivering the financial plan with recommendations and alternative solutions where applicable. Step five is implementation of the plan and the final step six is to monitor the plan on an ongoing basis to ensure everything is on track.

Limited financial planning may involve one or two areas of financial planning, such as investment or tax, but ignore others. This is often called modular planning. The planner will address specific areas and then the client is left with an incomplete plan. Only part of the overall picture has been covered. Many clients feel this is all they want or need until they are faced with other financial challenges.

In the no financial planning category the participants did not obtain any help from a financial planner regardless of their situation.

The results of the study were conclusive. Canadians who engage in comprehensive financial planning with a CFP professional had significantly higher levels of financial and emotional well-being than those who did no planning or limited planning. They feel their financial goals and retirement plans are on track, their ability to save has improved in the past five years, and they are more confident about their ability to handle bumps in the road. They were also able to fulfill their discretionary spending goals on things like vacations and occasional splurges.

The FPSC offers consumers a host of free information about financial planning and the financial planning industry. You can learn more about the FPSC by visiting their web site at Another good free resource on money can be found here.

The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail Mutual Funds provided through FundEX Investments Inc.

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