Half of Those with a Financial Plan on Track to Meet Goals

Planning makes all the difference in helping people manage their money for long-term goals, the Certified Financial Planner Board (CFP Board) and Consumer Federation of America (CFA) found in a survey. For those without a plan, only 32% said they are on pace to meet their goals.

“In all income classes, those with a financial plan had much greater financial confidence and security,” Stephen Brobeck, CFA executive director, told a press conference Monday. “Those with a plan are more confident about managing money and have more effectiveness with achieving financial goals, in addition to greater annual savings and net wealth.”

Kevin R. Keller, chief executive of the CFP Board, added: “Those who plan do better and feel better than those who do not. Whether rich or poor or middle class, the benefits of financial planning are not only for the rich, but are universal. Our job is to educate consumer that there is something they can proactively do, even in difficult economic times and even if they are not rich.”

Other key findings on those who have devised a personal financial plan:

• 52% feel “very confident” about managing money, savings and investments, compared with 30% without a plan.
• 48% say they are living comfortably, compared with 22% without a plan.
• Among those earning between $50,000 and $99,999 a year, 57% of planners are saving 10% or more of their income, versus 39% of those in that income bracket without a plan.
• Among those earning $25,000 to $49,999, 46% of planners pay the entire balance on their credit card bills each month, compared with 26% of non-planners in that income bracket.

Comparing figures from a CFA-NationsBank survey conducted in 1997, the Consumer Federation found a deterioration, nonetheless, in investors’ confidence about their financial future, with only 34% expecting to retire before age 65, down from 50% 15 years ago. Similarly, 51% feel behind on their retirement savings today, down from 38%, and only 48% are saving for their children’s higher education, down from 56% in 1997.

“While many Americans would require not to develop a personal financial plan because it requires one to think seriously about one’s finances—many Americans would prefer not to—it can only improve one’s financial confidence and security,” Brobeck said.

To this end, the CFP Board has an investor website, letsmakeaplan.org, where investors can vet financial advisers’ records and find a list of recommended questions to ask a prospective adviser, as well as red flags.

Keller said the CFA defines a comprehensive financial plan as one that covers “savings and investments, retirement, college, an emergency fund and other financial goals and insurance needs.” Asked what a comprehensive financial plan should cost, Brobeck said that it is all over the map. However, he added, “There are options for middle Americans, ranging from financial planners to other professionals, such as credit and housing counselors, for households with a great deal of debt.”

Lee Barney