November is financial literacy month, so I thought it would be a good time to address one of the key reasons for the stress and anxiety many Canadians feel about their finances. I believe it’s due to not having a financial plan. As a Certified Financial Planner®, I’ve been helping people live healthier financial lives through planning for 27 years. Over that time, I’ve noticed some trends which lead me to ponder why so few people seek the services of a financial planning professional for help.
The Trends
- There are more people working in the financial services industry today than ever before, which should make getting great advice more accessible
- There are more products and services than ever before for clients to choose from
- Despite all this, there are still very few Canadians with any form of financial plan and the level of stress and anxiety about money continues to be very high
Recent Stats
For some up-to-date statistics I recently reviewed 2 studies. The FP Canada Financial Stress Index 2024 and a Survey by CPP Investments in August 2024. They have some interesting findings that show the disconnect between Canadians clear need for help with their finances, and the lack of uptake in advice from financial planning professionals. All of which contributes significantly to the stress and anxiety people feel about their financial future.
The CPP Investments survey found “financial anxiety is a growing concern for Canadians, with 61% of Canadians saying they are afraid of running out of money during retirement” this number is even higher for women and younger Canadians age 28-44, the survey found.
This year’s Financial Stress Index from FP Canada found that “for at least two-thirds of Canadians, financial well-being means not having to worry about money day-to-day (68%) and retiring comfortably (61%)”, with “over half (54%) saying that financial stress has negatively impacted their life.” And finally, “19% say that getting advice from a professional would help reduce stress.”
Yet despite all this a full “60% of Canadians say they do not work with a financial professional”. Only a “third of Canadians work with a financial professional” of some sort, but very few “less than one-in-ten (4%) work with a financial planner” – like a CFP.
The study found further that “working with a financial professional such as a CFP® professional can help reduce stress, creating a sense of confidence and control in the face of uncertainty”. On the flip side, “Canadians who do not work with a financial professional are 23% more likely to have lost sleep about financial worries than those who do, indicating the reassurance and peace of mind financial professionals can provide.”
The Question
With so many Canadians feeling stressed about finances, the large number of financial professions in the industry and the clear benefits of working with a financial planning professional, why are so few people doing so?
The Answers
There are many reasons why people say they don’t plan: lack of time, products and solutions are too complex and procrastination.
Perhaps the most common reason is that people simply don’t understand what financial planning is, or what planners can do to help them. Many see it as some BIG complex thing that really isn’t for them….and they just don’t know how to take the first step.
This Blog Series on Financial Planning
Given that November is Financial Literacy Month, I decided to start this BLOG series as an educational tool. My goal is to help break down the barriers to planning by teaching people that Financial Planning is a simple process. Once you understand the process you will gain the confidence to sit down with a financial planning professional and get started on your plan.
Check back next time when I’ll give you the big picture of the overall financial planning process and it’s six steps. Then in other future posts we’ll go into each step so you will know what to expect along the way.
Resources:
1. FP Canada Financial Stress Index 2024
2. CPP Investments online survey conducted by Innovative Research Group from August 1-7, 2024
