The Value of Financial Planning

FPSB’s Global Consumer Survey

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Copyright © 2015 Financial Planning Standards Board

FPSB’s Global Consumer Survey

Danel Kuhlmann

Financial Planning Standards Board

Marketing & Communications Director

Who We Are

� Global, nonprofit professional standards-setting organization for financial planning

� Owner of the international CERTIFIED FINANCIAL PLANNER certification program

� Affiliate member of the International Organization of Securities Commissions (IOSCO)

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of Securities Commissions (IOSCO)

� Affiliate member of OECD and its International Network on Financial Education (INFE)

FPSB Member Territories (26)

Europe (8)Europe (8)AustriaFrance

GermanyIreland

North North America (2)America (2)Canada

United States

Middle East (1)Middle East (1)

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AustraliaChina

Chinese TaipeiHong KongIndia

Indonesia

JapanMalaysia

New ZealandRep. of KoreaSingapore

Thailand

IrelandThe Netherlands

SwitzerlandTurkey*United KingdomSouth South America (2)America (2)

BrazilColombia

AsiaAsia--Pacific (12)Pacific (12)

Africa (1)Africa (1)

South Africa

Middle East (1)Middle East (1)

Israel*

*Associate Member

Our Vision

To establish financial planning as a global profession, with the

CERTIFIED FINANCIAL

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CERTIFIED FINANCIAL PLANNER marks the symbol of excellence

Our Mission

� FPSB benefits the public by establishing, upholding and maintaining worldwide professional standards in financial planning

� FPSB’s commitment to excellence is represented by the marks of professional

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represented by the marks of professional distinction: CFP, CERTIFIED FINANCIAL PLANNER and

L A S E R

Leadership – Sustainability, Growth & Positioning

Awareness – Building Awareness with the Public

Standards & Professionalism – Practice and Certification

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Standards & Professionalism – Practice and Certification

Engagement – Engaging All Stakeholders

Recognition – Firm and Regulator Recognition

How was the Global Survey Conducted?

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Where was the Consumer Survey Conducted?

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A Global View

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Key Headlines• Low consumer confidence in achieving financial life goals: Just 22% have strong confidence that they will achieve

financial life goals. their financial situation. Few consumers globally feel strongly in their financial know-how (17%) or strategy (21%).

• The debt burden tops the list of financial priorities: Being debt-free of either major debt (55% rate as very important) or common consumer debt (54%) are top financial priorities for global consumers. Being prepared for an unexpected financial emergency (52%), home ownership (52%), and building up savings (51%) are also prioritized.

• There is broad interest in financial planning services to help consumers get on track financially: Retirement planning is seen as the most helpful financial planning service offered (50%), followed by investment planning (38%) and budgeting/cash flow/debt management (36%).

• Yet consumers face a range of barriers to engaging with a financial professional: Many consumers say they do not know who to trust (66% agree either strongly or somewhat), and some question whether the fees/costs are worth the expense (59%). Many do not seem to understand the financial planning fee structure (44% are not sure if they would prefer to pay fees or a commission for financial planning services).

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Next Steps: Relevant messaging should focus not only on retirement planning – but on budgeting and debt management as well, underscoring how help in this area can set consumers up for success in meeting many of their goals. At the same time, messaging should attack the notion that financial planning is costly, with unreasonable fees. And, building trust starts with reinforcing the code of ethics. Lastly, increase PR/visibility, driving home the notion that those working with a CFP professionalhave better outcomes.

Next Steps: Relevant messaging should focus not only on retirement planning – but on budgeting and debt management as well, underscoring how help in this area can set consumers up for success in meeting many of their goals. At the same time, messaging should attack the notion that financial planning is costly, with unreasonable fees. And, building trust starts with reinforcing the code of ethics. Lastly, increase PR/visibility, driving home the notion that those working with a CFP professionalhave better outcomes.

• Financial professionals can overcome consumer barriers by leveraging key benefits…: Demonstrating how financial planning helps save consumers money (58% cite as major reason to work with a financial professional), simplifying/explaining financial matters (56%), and tailoring long-term plans (56%) are keys to becoming a trusted source of advice (58%).

• …And by reminding consumers that financial planning works for others like them: Consumers working with a financial professional generally feel better prepared, and this trend is even more pronounced among those who see a CFP professional and those with a comprehensive written financial plan. For instance:

� 43% of those working with a CFP professional strongly agree that they are confident they will achieve their financial life goals, compared to 31% of those working with any professional and just 15% not working with a professional

� 39% of those with a comprehensive written plan say the same, versus just 14% of those who do not have a plan.

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FINANCIAL OUTLOOK

Section 1:

Key Findings

Consumers are challenged…

Only 17% of consumers strongly

agree they are knowledgeable

WHAT?

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agree they are knowledgeable about financial matters

Key Findings

Consumers are challenged…

Only 19% feel successful at

sticking to their financial

WHAT?

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sticking to their financial strategies

Key Findings

Consumers are challenged…

Only 22% strongly feel

confident that they will achieve

WHAT?

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confident that they will achieve financial life goals

Key Findings

Consumers are challenged…

Only one in three consumers

WHAT?

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Only one in three consumers

have a written financial plan

Key Findings

Having a plan and a

Working with a financial professional

puts consumers in control of their financial lives

WHAT?

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Consumers with a

comprehensive, written financial plan are three times

more likely to feel confidentthey will achieve their

life goals

Consumers who work with a

CFP professional are 12% more confident, 15% more satisfied and feel more prepared over working with

other advisers

Groups who struggle most with finances…

These individuals are most likely to be…

Women

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Lower-income, and with fewer investable assets

Not currently working with a financial professional

Key Findings

Consumers rely on their network for information

WHAT?

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Consumers rely on friends, family and websites more than financial professionals for

information on financial matters

Key Findings

MOST IMPORTANT

Consumers rate trustworthiness as the

Consideration when selecting a financial professional

WHAT?

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BUT MOST DON’T KNOW WHOM TO TRUST

66% consumers don’t knowwhom to trust when it comes

to financial matters

68% of consumers rate

trustworthiness as a very important consideration when selecting a

financial professional

Key Findings

Benefits of working with a financial professional:

58% say they are a trusted source of advice

58% say they show how financial planning helps save money

WHAT?

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56% say they simplify and explain financial matters

56% say they develop a long-term plan tailored to their needs that helps achieve financial goals

55% say they adhere to a rigorous code of ethics

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BARRIERS TO FINANCIAL PLANNING

Section 2:

Trust is a major barrier to starting conversations with consumers

[VALOR]

I don’t know whom to trust

Top Barriers to Financial Planning(Strongly / somewhat agree)

� Cost and feeling overwhelmed by the process also get in the way

2254%

56%

57%

57%

57%

59%R]

It is too confusing

Too much work/paperwork

I can’t afford it

It’s just too complicated

I don’t know where to start

Fees/costs are not worth it

Some are simply putting it off

say they will tackle financial planning when they are older38%Agreement by age (%)

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38

50

39

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Total 18-34 35-49 50+

� Younger investors

are most apt to be

putting off financial

planning

Most lack a written plan

32%

57%

• Globally, 32% of consumers surveyed said they have some type a financial plan

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32%

10%

Yes No Not Sure • There are benefits to having a plan

Those with a written financial plan project greater confidence

14%39%I am confident that I will achieve my

financial life goals

Financial Assessment(Strongly agree)

Do not / Not sure

Have a comprehensive written financial plan

� They also express more interest in several financial planning services: investment

planning, estate planning, and risk management

2526%

11%

13%

13%

14%

26%

31%

33%

38%

39%

I worry a lot about my financial situation

I am knowledgeable about finance and financial matters

I am successful in sticking with my financial strategies

I have a financial strategy to deal with life events and achieve goals

financial life goals

Those with and most likely to be without a written financial plan

More likely to have a plan…

Men (36%)

Upper-income (42%), and with

Under 50 (41% among those 18-

34, 34% among those 35-49)

Women (29%)

Lower-income (26%), and with

Older, ages 50+ (24%)

More likely to NOT have a plan…

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Upper-income (42%), and with

more investable assets (44%)

Currently working with a CFP

professional (71%)

More educated (41%)

Lower-income (26%), and with

fewer investable assets (26%)

Not currently working with a financial

professional (17%)

Less educated (26%)

Interest in some areas of financial planning aligns with financial goals…

50%

49%

Financial Goals vs. Interest in Financial Planning Service

Retiring in the lifestyle desiredPlanning for retirement

� Especially retirement planning and investment planning

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22%

25%

38%

21%

34%

43%Making sure investments are profitableInvestment planning

Reducing the impact of taxesTax planning

Leaving a good sized inheritanceEstate planning

Rate as a very important financial goal

Select as a financial planning service interested in

…But, many do not see the potential in budgeting and debt management

services

54%

55%

Financial Goals vs. Interest in Financial Planning Service

Free of major financial debt

Free of common consumer debt

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36%

47%

51%

52%

52%Owning your own home

Prepared for an unexpected emergency

Building an “emergency” fund

Managing finances to achieve life goals

Budgeting, cash flow, and debt management

Rate as a very important financial goal

Select as a financial planning service interested in

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EXPERIENCE WITH FINANCIAL PROFESSIONALS

Section 3:

Those seeing a financial professional generally feel better prepared

� Consumers currently working with a CFP professional tend to express even

more financial confidence

15%31%

43%

I am active in having a financial

I am confident that I will achieve my financial life goals

Financial Assessment(Strongly agree)

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Currently working with a CFPprofessional

Not currently working with a financial professional

Currently working with a financial professional

26%

12%

13%

14%

26%

24%

26%

29%

32%

39%

40%

42%

I worry a lot about my financial situation

I consider myself knowledgeable about finance and financial

matters

I am successful in sticking with my financial strategies

I am active in having a financial strategy to deal with major life

events and/or achieve life goals

Consumers globally are not

fully confident in their finances,

with most not feeling very

WHAT? SO WHAT? NOW WHAT?

There are considerable unmet

needs in the marketplace.

Many want or are open to help,

Key Findings

First, building trust starts with

reinforcing the code of ethics.

Second, relevant messaging

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with most not feeling very

knowledgeable. They

recognize the benefits that

financial planning services

provide – and this is something

that is echoed by those who

have actually worked with a

professional. But, many overall

are concerned about costs and

project a feeling of being

overwhelmed by the process.

For all, trust is a key

component.

Many want or are open to help,

but do not know whom to trust

or are beset by a range of

barriers.

Meaningful connection and

engagement starts with

understanding consumer

priorities, mindset, and

barriers, so that financial

professionals can deliver

messaging and solutions that

will resonate.

Second, relevant messaging

should focus not only on

retirement planning and

investment strategy – but on

budgeting and debt management

as well, underscoring how help in

this area can set investors up for

success in meeting many of their

goals. At the same time,

messaging should attack the

notion that financial planning is

confusing and costly, with

unreasonable fees.

Key FindingsConsumers globally

are cautiously

optimistic when it

comes to finances

and financial

planning; sizable

share struggle

Consumers globally

are cautiously

optimistic when it

comes to finances

and financial

planning; sizable

share struggle

� There is lack of confidence in achieving their financial and life goals and even less feel knowledgeable about financial matters.

� And, many do not feel they will be successful in sticking to their financial strategies.

� Majority do NOT have a financial plan� Most consumers turn towards friends, family and websites

for financial information

� There is lack of confidence in achieving their financial and life goals and even less feel knowledgeable about financial matters.

� And, many do not feel they will be successful in sticking to their financial strategies.

� Majority do NOT have a financial plan� Most consumers turn towards friends, family and websites

for financial information

� Consumers express the most interest in retirement planning (50%) and ensuring profitable investments (38%)

� Consumers express the most interest in retirement planning (50%) and ensuring profitable investments (38%)

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Scared off by costs

and a seemingly

complex process,

many are not

seeing the full

range of benefits

that come with

financial planning

Scared off by costs

and a seemingly

complex process,

many are not

seeing the full

range of benefits

that come with

financial planning

planning (50%) and ensuring profitable investments (38%) – two areas that align closely with their financial priorities (49% and 43%, respectively, select these as “very important”)

� Yet, many are not connecting the dots between financial

goals like being free of major (55%) and common (54%) consumer debt, owning a house (52%), and preparing for an emergency (52%) – and financial planning services

around budgeting, cash flow, and debt management� Just over one in three (36%) are interested in this financial

planning service

� Moreover, concerns about the cost (57%) of financial planning and not knowing how to get started (57%) are a hindrance to many

planning (50%) and ensuring profitable investments (38%) – two areas that align closely with their financial priorities (49% and 43%, respectively, select these as “very important”)

� Yet, many are not connecting the dots between financial

goals like being free of major (55%) and common (54%) consumer debt, owning a house (52%), and preparing for an emergency (52%) – and financial planning services

around budgeting, cash flow, and debt management� Just over one in three (36%) are interested in this financial

planning service

� Moreover, concerns about the cost (57%) of financial planning and not knowing how to get started (57%) are a hindrance to many

Key Findings

Trust and a code of

ethics are essential

to financial planning

in consumers’ eyes

– and is an area

that cuts both ways

Trust and a code of

ethics are essential

to financial planning

in consumers’ eyes

– and is an area

that cuts both ways

� The top barrier to financial planning is not knowing whom to trust (66%)

� The notions that financial professionals are a “trusted source of advice” and “adhere to a rigorous code of ethics” are among the most powerful reasons to work with a financial professional (58% and 55%, respectively, rate these as “major” reasons)

� Along these lines, “trustworthiness” ranks first as the most

� The top barrier to financial planning is not knowing whom to trust (66%)

� The notions that financial professionals are a “trusted source of advice” and “adhere to a rigorous code of ethics” are among the most powerful reasons to work with a financial professional (58% and 55%, respectively, rate these as “major” reasons)

� Along these lines, “trustworthiness” ranks first as the most

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that cuts both ways

in deciding whether

or not to work with

a financial

professional

that cuts both ways

in deciding whether

or not to work with

a financial

professional

� Along these lines, “trustworthiness” ranks first as the most important consideration when choosing a financial advisor (68% rate as “very important”)

� And, consumers who currently work with a financial professional praise these professionals first and foremost for demonstrating honesty and integrity (47% give an “excellent” rating)

� Along these lines, “trustworthiness” ranks first as the most important consideration when choosing a financial advisor (68% rate as “very important”)

� And, consumers who currently work with a financial professional praise these professionals first and foremost for demonstrating honesty and integrity (47% give an “excellent” rating)

Key Findings

Investors reveal

advantages to

working with a

financial

professional,

though there is

room for

Investors reveal

advantages to

working with a

financial

professional,

though there is

room for

� 45% are currently working with a financial professional� An overwhelming majority of these investors are satisfied

with this professional – though more are “somewhat” (52%) instead of “very” (42%) satisfied

� Along these lines, fewer than half report being “very satisfied” with their financial professional when it comes to key financial planning activities, including:

� Clearly defining the relationship (39%)

� Developing a personalized plan (36%)� Monitoring progress (34%)

� 45% are currently working with a financial professional� An overwhelming majority of these investors are satisfied

with this professional – though more are “somewhat” (52%) instead of “very” (42%) satisfied

� Along these lines, fewer than half report being “very satisfied” with their financial professional when it comes to key financial planning activities, including:

� Clearly defining the relationship (39%)

� Developing a personalized plan (36%)� Monitoring progress (34%)

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room for

improvement

room for

improvement

� Monitoring progress (34%)

� In spite of projecting some room for improvement, those working with a financial professional are more apt to be confident that they will reach their financial goals (77% vs. 63%)

� Monitoring progress (34%)

� In spite of projecting some room for improvement, those working with a financial professional are more apt to be confident that they will reach their financial goals (77% vs. 63%)

Higher satisfaction

reported when

working with CFP

professionals

Higher satisfaction

reported when

working with CFP

professionals

� One in three (32%) have heard of the CFP designation� 9% are currently working with a CFP professional� Those working with a CFP professional tend to report higher

levels of satisfaction with their professional – and are more apt to give “excellent” job performance ratings – than those working with other types of financial professionals

� One in three (32%) have heard of the CFP designation� 9% are currently working with a CFP professional� Those working with a CFP professional tend to report higher

levels of satisfaction with their professional – and are more apt to give “excellent” job performance ratings – than those working with other types of financial professionals

SO WHAT?

There are considerable unmet needs in the marketplace. Many want or are open to help, but do not know whom to trust or are beset by a range of barriers.

So What

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Meaningful connection and engagement starts with understanding consumer priorities, mindset, and barriers, so that financial planning professionals can deliver messaging and solutions that will resonate with the consumer.

NOW WHAT?Now What

We in this room can make a difference – continue to uphold the professional standards and rigorous CFP certification requirements

FPSB wants to help design content and training to help

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FPSB wants to help design content and training to help consumer financial literacy

Establish global partnerships to continue to evolve the financial planning profession

Continue to educate and message to the marketplace

NOW WHAT?Now What

Building trust starts with reinforcing the code of ethics, or having disciplinary procedures within the profession. Second, relevant messaging should focus not only on retirement planning and investment strategy – but on

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retirement planning and investment strategy – but on budgeting and debt management as well

At the same time, messaging should attack the notion that financial planning is confusing and costly, with unreasonable fees.

Video –

Value of Financial Planning for

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Copyright © 2015 Financial Planning Standards Board

Value of Financial Planning for Consumers

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THANK YOU

Danel Kuhlmann

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Copyright © 2015 Financial Planning Standards Board

Danel KuhlmannFPSB