2009 National Consumer Survey on Personal Finance

Transcription

1 2009 National Consumer Survey on Personal Finance 2009

2 Mission Statement The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP certification and upholding it as the recognized standard of excellence for personal financial planning.

3 Table of Contents. Introduction 2 2. Survey Methodology 3 3. Respondent Characteristics 4 4. Core Questions 8 5. Baseline Perceptions and Behaviors 3 6. Respondents Who Have Written Financial Plan In-Place With Involvement of a Financial Professional 6 7. Respondents Who Have Written Financial Plan In-Place With No Involvement of a Financial Professional Respondents Who Have No Written Financial Plan In-Place 32 Copyright 2009, Certified Financial Planner Board of Standards Inc. All rights reserved.

4 . Introduction Certified Financial Planner Board of Standards (CFP Board) sponsored this 2009 National Consumer Survey on Personal Finance to establish baseline data on current consumer personal finance and financial planning related attitudes and behaviors. A nonprofit certifying and standards-setting organization, CFP Board s mission is to benefit the public by granting the CFP certification and upholding it as the recognized standard of excellence for personal financial planning. Consistent with this mission and its role as a source of expertise on the financial planning profession, CFP Board, from time to time, conducts consumer research to: Understand consumer expectations of financial planners and their satisfaction with the financial planning experience. Develop demographic, behavioral and attitudinal profiles of consumers who are using financial planners and who are likely to benefit from professional financial planning assistance. Ascertain the perceived value of financial planning and the CFP certification by the public. Gauge shifts in behavior, attitudes and perceptions over time. It is CFP Board s hope that the periodic evaluation of the information gained from such research will help CFP Board to better fulfill its standards-setting function for the profession and promote consumer understanding of the value of financial planning and the CFP certification marks. This report summarizes findings in these key areas, describes the survey s methodology and suggests implications that can be drawn from the research results. Questions about the survey results and inquiries regarding the survey instrument may be directed to CFP Board at: CFP Board 425 K Street NW, Suite 500 Washington, DC P: F: E: media@cfpboard.org W: 2

5 2. Methodology CFP Board s 2009 National Consumer Survey on Personal Finance was conducted by Westat, one of the nation s largest and most well known survey research firms. The survey was conducted among a large and representative cross section of the U.S. population, as shown in Section 3, so that financial planning subject matter issues could be assessed from the perspective of all major population demographics in the U.S. The survey was conducted via a self-administered Internet-based questionnaire. Westat collected data from,742 Internet respondents in mid-may through early June Section 3 provides extensive documentation of Respondent Characteristics and compares these data with data from the U.S. Census. 3

6 3. Respondent Characteristics The following tables show demographic and profile characteristics of the,742 sample respondents compared to those of U.S. population based upon U.S. Census estimates. As shown in these tables, respondent characteristics are very representative of U.S. population characteristics in virtually all instances. In the detailed findings presented in this report, most data are analyzed by Educational Achievement, Household Income, and Investable Assets. Table 3. Education achievement (S-2) College graduate and graduate degree 35% 4% 34% 44% Some college or 2-year degree 24% 23% High school graduate or less Sample Census Table 3.2 Household income (S-3) 8% 5% 0% 5% Over $50,000 34% 47% 3% 54% $00,00 to $50,000 $50,00 to $00,000 Sample Census Under $50,000 Note: 6% of respondents did not provide Household Income data. 4

7 Table 3.3 Investable assets (Q32) 3% Over $,000,000 23% 56% $00,000 to $,000,000 Under $00,000 Sample Census 2 Note: 8% of respondents did not provide Investable Asset data. 2 Note: Not Available from U.S. Census. Table 3.4 Age (S-/AGEGP) 65 and older 4% 7% % 6% 3% 7% 3% 8% 55 to 64 20% 22% 9% 20% 45 to 54 Sample Census 35 to to 34 Under 25 5

8 Table 3.5 Ethnicity (S-5) 4% 2% 3% 5% % 3% Other White or Caucasian 7% 7% Hispanic or Latino Sample Census Black or African American Note: % of respondents did not provide Ethnicity data. Table 3.6 Gender (S-6) 43% 57% 49% 5% Female Male Sample Census 6

9 Table 3.7 Regions by state (S-4/REGN) Northeast 6% Northeast 8% West 24% Midwest 23% West 23% Midwest 22% South 37% South 36% Sample Census Regions are defined in the following way. Midwest 2 States: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin. West 3 States: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming. South 6 States and District of Columbia: Alabama, Arkansas, Delaware, DC, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia. Northeast 9 States: New England States of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut; and Mid-Atlantic States of New York, New Jersey, and Pennsylvania. 7

10 4. Core Questions All,742 respondents answered a series of Core Questions which (a) introduced them to the nature and focus of the survey and (b) resulted in their being classified into one of three respondent groups as described and presented in Sections 6, 7, and 8. All tables in this section are based on,742 respondents unless indicated differently in a table footnote. Section 6: Respondents Who Have Written Financial Plan In-Place With Involvement of a Financial Professional Section 7: Respondents Who Have Written Financial Plan In-Place With No Involvement of a Financial Professional Section 8: Respondents Who Have No Written Financial Plan In-Place Table 4. Assessment of financial planning issues (Q-)* It is clear that most respondents feel that four financial planning issues are most important in their lives: () managing retirement income; (2) providing health insurance coverage; (3) managing/reducing current debt; and (4) building a retirement fund. Financial Planning Issues Percent Generating current income 59 Providing health insurance coverage 55 Managing/reducing current debt 53 Building a retirement fund 5 Building an emergency fund 47 Preparing for future medical needs (your or others, e.g., parents) 42 Managing retirement income 40 Providing life insurance coverage 35 Accumulating capital/assets 27 Purchasing/renovating a home 26 Saving for vacation/travel/recreational expenses 25 Managing an unexpected windfall 24 Sheltering income from taxes 24 Managing employee benefits (retirement savings, insurance, health savings accounts, etc.) 23 Building a college fund 22 Building an inheritance for heirs 20 Financing your own business 6 Percents show sum of two most important response categories on a 6-point scale. *Parenthetical notes refer to the number assigned to questions as they appeared on the survey instrument. The survey instrument is available from CFP Board upon request. 8

11 Table 4.2 Important financial planning issues by respondent education, household income, and investable assets (Q-) For the most part, it appears that a respondent s investable asset level most influences perceptions of financial planning issues. Respondents with high levels of investable assets give relatively low importance ratings on the generation of current income, provision of healthcare coverage, and managing debt. Similarly, respondents with high household incomes also give relatively low importance ratings on providing healthcare coverage and managing debt. Building a retirement fund is relatively unimportant to respondents with low education and income levels. Education Income Assets Important Financial Planning Issues < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > Generating current income 60% 59% 57% 60% 60% 50% 62% 62% 56% 49% Providing health insurance coverage Managing/reducing current debt Building a retirement fund Percents show sum of two most important response categories on a 6-point scale. 9

12 Table 4.3 Ability to successfully manage important financial issues (Q-2) A relatively large proportion of respondents feel that they have a good (48%) or average (43%) ability to manage financial issues that are important in their lives. Only 9% of respondents felt that they have a poor ability to manage important financial issues. Ability to Manage Percent Very good 20 Good 28 Somewhat good 29 Somewhat poor 4 Poor 5 Very poor 4 Table 4.4 Ability to manage important issues by respondent education, household income, and investable assets (Q-2) For the most part, respondent ratings of their ability to manage important financial issues do not vary by respondent education levels. However, respondents with higher household incomes and more investable assets rate their ability to manage important financial issues at higher levels than their counterparts in other categories. Education Income Assets Ability < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > Very good 20% 20% 20% 8% 2% 9% 29% 6% 26% 40% Good Somewhat good Somewhat poor Poor Very poor

13 Table 4.5 Currently have a written financial plan (Q2) Two-thirds (64%) of respondents in this survey do not have a written financial plan in-place to guide their personal financial affairs Conversely, only 7% have a written and regularly updated financial plan in-place. Some respondents have a financial plan that is not updated regularly (8%) or had a plan in-place in the past but not at the current time (%). Financial Plan In-Place Percent Yes, written plan in-place now and updated regularly 7 Yes, written plan in-place now but not updated in past year 8 No, not now but a written plan was in-place in the past No, never had a written plan in-place 64 Table 4.6 Written financial plan by respondent education, household income, and investable assets (Q2) Respondents with at least a college degree, those with higher household incomes, and those with more investable assets are more likely to have a written financial plan in-place than their counterparts with lower education, income, and asset levels. Education Income Assets Financial Plan < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > In-place and regularly updated % 8% 23% % 20% 28% 33% % 30% 38% In-place but not updated in past year In-place in the past No, never had a plan

14 Table 4.7 If Financial Plan In-Place Now or in the Past: Financial planning resources used for plan development (Q3) Many respondents with a written personal financial plan used an outside financial professional (38%) to develop their plan though a larger percent of respondents (42%) chose to develop their financial plan using their own capabilities (including those respondents who develop their own plans and those who use planning software as part of their personal financial planning efforts). Family members who are (8%) and who are not (2%) financial professionals assist some respondents in the development of financial plans. Financial Resources Percent Working with an outside financial professional 38 Developing your financial plan on your own 37 Working with a family member or friend who is not a financial professional 2 Working with a family member or friend who is a financial professional 8 Using planning software or an Internet-based application on your own 5 Percents based on 62 respondents. Table 4.8 Use of outside professional or own plan development by respondent education, household income, and investable assets (Q3) Respondents with at least a college degree, those with higher household incomes, and those with more investable assets are more likely to use an outside financial professional than their counterparts with lower education, income, and asset levels. Education Income Assets Financial Plan < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > In-place and regularly updated 26% 30% 49% 26% 39% 54% 53% 25% 53% 67% In-place but not updated in past year

15 5. Baseline Perceptions and Behaviors All,742 respondents were asked a series of questions that examined their perceptions of credentials in financial planning and information sources used to gain financial information. Table 5. Awareness of certifications, licenses, and official designations (Q26) Respondents have the greatest current awareness of the CPA (53%) and CFP certification (28%) credentials though 40% of all respondents were not aware of any credential for financial professionals. Credentials for Financial Professionals Percent CPA (Certified Public Accountant) 53 CFP (CERTIFIED FINANCIAL PLANNER ) 28 CFA (Chartered Financial Analysis) 3 CLU (Chartered Life Underwriter) 2 PFS (Personal Financial Specialist) 0 RIA (Registered Investment Advisor) 0 ChFC (Chartered Financial Consultant) 5 Not aware of any credential 40 Data show percent of,742 respondents who selected each response category and, as a result, multiple responses were permitted and column does not sum to 00%. 3

16 Table 5.2 Awareness of certifications, licenses, and official designations by investable assets (Q26) It is clear that awareness of certifications, licenses, and official designations for financial professionals is related to the level of a consumer s investable assets (i.e., greater awareness levels if found among consumers with over $ ML in investable assets). Assets Credentials for Financial Professionals Under $00,000 $00,000 - $,000,000 Over $,000,000 CPA (Certified Public Accountant) 53% 6% 69% CFP (CERTIFIED FINANCIAL PLANNER ) CFA (Chartered Financial Analysis) CLU (Chartered Life Underwriter) PFS (Personal Financial Specialist) RIA (Registered Investment Advisor) ChFC (Chartered Financial Consultant) Not aware of any credential Percents are responses for each certification in Table 5. by respondent s investable assets. Table 5.3 Single certification, license, or official designation has best reputation for ethical conduct (Q27) While many respondents (33%) did not express an opinion, the CPA (38%) and CFP certification (7%) credentials were viewed to be those credentials with the best reputations for ethical conduct by most respondents. Credentials for Financial Professionals Percent CPA (Certified Public Accountant) 38 CFP (CERTIFIED FINANCIAL PLANNER ) 7 PFS (Personal Financial Specialist) 3 CFA (Chartered Financial Analysis) 2 ChFC (Chartered Financial Consultant) 2 CLU (Chartered Life Underwriter) 2 RIA (Registered Investment Advisor) 2 Did not select a credential 33 Percents based upon,045 respondents who identified one or more credentials in Table 5.. 4

17 Table 5.4 Credential with best single reputation for ethical conduct by respondent education, household income, and investable assets (Q27) Respondent ratings on whether the CPA or CFP certification is the single credential with the best reputation for ethical conduct do not vary by respondent education, household income, and investable assets. Education Income Assets Best Single Credential for Ethical Conduct < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > CPA (Certified Public Accountant) 35% 44% 36% 38% 37% 36% 42% 37% 38% 38% CFP (CERTIFIED FINANCIAL PLANNER ) Don t know Percents based upon,045 respondents who identified one or more credentials in Table 5.. Table 5.5 Unaided Recall: Thinking about CFP What first comes to mind? (Q28) A large proportion of respondents (63%) answering this open-end question associate favorable perceptions with the term CFP. Reaction or Mindset Percent Favorable Responses: Educated and qualified professional; provides advice on spending or investing money; and manages personal finances and investments for a fee Unfavorable Responses: Question honesty; trustworthiness; legitimacy; capability and training; expenses or fees: and value of services Miscellaneous responses 5 Percents based on 655 total answers from 628 respondents who answered this question (i.e., 62% of all respondents did not answer this question). 5

18 6. Respondents Who Have Written Financial Plan In-Place With Involvement Of A Financial Professional A total of 284 respondents have a written financial plan in-place at present and a financial professional was involved in developing these plans. All tables in this section are based upon 284 respondents unless indicated differently in a table footnote. Table 6. Financial planning needs most important in motivating use of a financial professional (Q3) Four issues most motivate respondent s use of a financial professional for the development of a written financial plan: () retirement goals and planning; (2) advice on a broad range of financial matters; (3) savings goals and planning; and (4) investment goals and planning. Financial Planning Needs Percent Retirement goals and planning 62 Wanted advice on a broad range of financial matters 48 Savings goals and planning 4 Investment goals and planning 36 Balancing short- and long-term goals and planning 28 Estate planning 27 Cash and debt management 27 Tax planning 2 Insurance planning 7 Education funding 6 Stock option strategies 4 Multi-generational and family planning 2 Charitable giving and philanthropy goals and planning 8 Employee benefits planning 8 Change in marital status 7 Other motivating factors 2 Data show percent of 284 respondents who selected each response category and, as a result, multiple responses were permitted and column does not sum to 00%. 6

19 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.2 Important financial planning motivations by respondent education, household income, and investable assets (Q4) Respondents in each education, income, and asset level subsegment assign a similar degree of importance to the four most important financial planning needs identified in Table 6.. Education Income Assets Financial Planning Needs < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > Retirement goals and planning 7% 22% 6% 2% 48% 9% 3% 29% 62% 9% Wanted advice on broad financial matters Savings goals and planning Investment goals and planning Percents show education, income, and asset levels of each respondent who selected the most important financial planning issues in Table 6.. Table 6.3 Financial professionals interviewed and selected for development of the financial plan (Q5- and 5-2) Respondents most frequently interview-consider and use three types of financial professional when developing their financial plans: () CERTIFIED FINANCIAL PLANNER professionals; (2) financial advisors; and (3) accountant/cpas. Financial Professionals Interviewed/ Considered Worked With or Used CERTIFIED FINANCIAL PLANNER professional Financial Advisor Accountant/CPA 26 2 Attorney 6 8 Banker 8 5 Insurance agent 7 4 Stock broker 7 3 Financial planner (not certified) 5 2 Another professional 4 3 Data show percent of 284 respondents who selected each response category and, as a result, multiple responses were permitted and columns do not sum to 00%. 7

20 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.4 Financial professionals interviewed and selected for the development of a financial plan by investable assets (Q5- and 5-2) Respondents with investable assets over $ ML more frequently interview or consider a broader array of financial professionals for financial plan development than consumers with lower levels of investable assets. However, consumers in all segments tend to most frequently use a CFP professional or financial advisor for the development of their financial plans. Assets Financial Professionals Under $00,000 - Over $00,000 $,000,000 $,000,000 Interviewed/ Considered Worked With or Used Interviewed/ Considered Worked With or Used Interviewed/ Considered Worked With or Used CERTIFIED FINANCIAL PLANNER professional 36% 33% 4% 43% 63% 56% Financial advisor Accountant/CPA Attorney Banker Insurance agent Stock broker Financial planner (not certified) Another professional Percents are responses for each financial professional in Table 6.3 by respondent s investable assets. 8

21 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.5 Sources of information used to first learn about the financial professional used to develop respondent s financial plan (Q6) It is clear that interpersonal information sources recommendations of family members (3%), friends (27%), and co-workers (3%) are most frequently used by respondents to learn about those financial professionals used to develop their financial plans. Information Sources Percent Recommendation of a family member 3 Recommendation of a friend 27 Recommendation of a coworker 3 Internet site listing financial planners 7 Recommendation of a lawyer 7 Recommendation of a banker 7 Recommendation of an accountant 6 Print advertisement or brochure 5 Television or radio advertisement or program 4 Magazine article or listing of financial planners 3 Other 7 Data show percent of 284 respondents who selected each response category and, as a result, multiple responses were permitted and columns does not sum to 00%. Table 6.6 Financial professional used to develop plan provided credible and competent services (Q7) In overall terms, a large proportion of respondents (80%) felt that their financial professional provided credible and competent services. Perceptions of Financial Planning Services Percent Definitely yes 56 Yes 24 Probably yes Probably no 5 No 2 Definitely no 2 9

22 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.7 Credibility and competent services by respondent education, household income, and investable assets (Q7) Respondent perceptions of their financial professional s credibility and competency do not vary by their education, income, and asset levels. Education Income Assets Credible-Competent Services < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > Definitely yes 6% 58% 54% 55% 54% 63% 70% 57% 55% 67% Yes Probably yes Probably no No Definitely no Table 6.8 Credibility and competent services by type of financial professional (Q7) Respondents using CFP professionals, financial advisors, and accountant/cpas all strongly believe that their financial professional provides credible and competent services. Credible-Competent Services Financial Professional Definitely yes Yes Probably yes Probably no No Definitely no CERTIFIED FINANCIAL PLANNER professional 57% 24% 2% 4% % 2% Financial advisor Accountant/CPA Financial professionals identified by respondents in Table

23 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.9 Year current plan put in-place (Q8) Recognizing that 29% of respondents could not recall a date, a large proportion of respondents (39%) put their written financial plans in-place in the 200 to 2009 period and another 24% reported doing so in the 99 to 2000 timeframe. Year Put In-Place Percent 980 or before 2 98 to to to Can t recall 29 Table 6.0 Respondent benefit from having a written financial plan (Q9) A large proportion of respondents (65%) strongly believe that they have benefitted from the development of a written financial plan. Written Financial Plan Beneficial Percent Definitely yes 46 Yes 9 Probably yes 7 Probably no 7 No 4 Definitely no 2 Don t know 5 2

24 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6. Benefit from having a written financial plan by respondent education, household income, and investable assets (Q9) Respondent s favorable perceptions of the benefits of having a written financial plan do not vary by education, income, or asset levels. Education Income Assets Benefit < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > Definitely yes 43% 45% 48% 39% 46% 50% 6% 40% 5% 44% Yes Probably yes Probably no No Definitely no Table 6.2 Benefit from having a written financial plan by type of financial professional (Q9) Respondents using CFP professionals, financial advisors, and accountants/cpas all strongly feel that they have benefitted from a written financial plan. Written Financial Plan Beneficial Financial Professional Definitely yes Yes Probably yes Probably no No Definitely no CERTIFIED FINANCIAL PLANNER professional 53% 6% 7% 6% 3% 3% Financial advisor Accountant/CPA Financial professionals identified by respondents in Table

25 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.3 Use of financial professional in current economic environment (Q0) In the current economic environment, 36% of respondents have tended to use their financial professionals to a greater extent than in the past though 44% tend to use their financial professional at present to about the same degree as in the past. Financial Planner Use: Increase or Decrease Percent Definitely greater extent 9 Greater extent 7 Probably greater extent 30 Probably lesser extent 4 Lesser extent 5 Definitely lesser extent 8 Don t know 6 Table 6.4 Length of time working with current financial professional (Q) While 9% can t recall, it is interesting to note that 33% of respondents have worked with their current financial professional between 2 and 5 years while 40% have done so for 6 years or longer. Only 8% have worked with their current financial professional for year or less. Number of Years Percent year or less 8 2 to 5 years 33 6 to 0 years 7 years or longer 23 Can t recall 9 23

26 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.5 Length of time working with current financial professional by respondent education, household income, and investable assets (Q) Respondents with higher education, income, and asset levels tend to work with financial professionals for longer periods of time than their counterparts in other sample population subsegments. Education Income Assets Number of Years < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > year or less 9% % 7% 5% 2% 7% 0% 20% 8% 0% 2 to 5 years to 0 years years or longer Table 6.6 Length of time working with current financial professional by type of financial professional (Q) Accountants/CPAs tend to have particularly long relationships with their clients though, for the most part, CFP professionals and financial advisors also appear to have solid and multi-year relationships with their clients as well. Financial Professionals Year or Less 2 to 5 Years 6 to 0 Years Years or Longer CERTIFIED FINANCIAL PLANNER professional % 37% 23% 29% Financial advisor Accountant/CPA Financial professionals identified by respondents in Table

27 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.7 Excluding Current Financial Professional: Number of financial professionals worked with in the past (Q2) While a large proportion of respondents indicate that they have not worked with another financial professional in the past (43%) or could not recall if they had worked with someone other than their current financial professional in the past (6%), most respondents have worked with one (20%) or two (2%) other financial professionals sometime in the past. Number of Financial Professionals Percent None no other financial professional 43 One other financial professional 20 Two other financial professionals 2 Three other financial professionals 5 Four or more other financial professionals 4 Can t recall 6 Table 6.8 If Worked With Other Financial Professionals in the Past: Reasons for switching from last to current financial professional (Q2) It appears that respondents switch from one financial professional to another for a variety of almost equally important reasons though a qualifications upgrade (44%) is viewed to be the most important factor motivating a change in their relationships with a financial planner. Number of Financial Professionals Percent Wanted to switch to a more qualified professional (Q2-5) 44 My financial situation changed (Q2-) 32 Could not trust advice and recommendations of the previous financial professional (Q2-4) 27 Had a bad experience with the previous financial professional (Q2-5) 27 Previous financial professional was too expensive (Q2-2) 2 Percents are based upon 6 respondents and show sum of two most important response categories on a 6-point scale. 25

28 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.9 Confidence that financial professional used by respondent places respondent s interest ahead of their own interests (Q4) A large proportion of respondents are confident that their financial professional places their interests ahead of their own. Confidence Percent Very confident 46 Confident 27 Somewhat confident 6 Somewhat not confident 4 Not confident 2 Definitely not confident 2 Don t know 3 Table 6.28 Confidence that designated financial professional places respondent s interests ahead of their own by respondent education, household income, and investable assets (Q4) Confidence in a respondent s financial professional to put their client s interests ahead of their own vary by respondent education, income, and assets. Education Income Assets Confidence < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > Very confident 53% 49% 43% 4% 46% 46% 6% 45% 47% 48% Confident Somewhat confident Somewhat not confident Not confident Definitely not confident

29 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.29 Confidence that designated financial professional places respondent s interests ahead of their own by financial professional (Q4) Confidence in a respondent s use of a specific financial professional does not vary across their use of CFP professionals, financial advisors, or accountant/cpas in the development of their written financial plans. Financial Professional Confidence CERTIFIED FINANCIAL PLANNER Professional Financial Advisor Accountant/ CPA Very confident 44% 49% 54% Confident Somewhat confident 8 9 Somewhat not confident Not confident 3 Definitely not confident 2 3 Don t know Financial professionals identified by respondents in Table 6.3. Table 6.30 Importance of financial professionals meeting requirements (Q5) Respondents feel that it would be important for financial professions to meet a variety of requirements, particularly those related ethics and practice standards. Requirements Percent Adhere to a professional code of ethics (Q5-5) 89 Adhere to professional practice standards (Q5-4) 87 Face enforcement and possible disciplinary action for violations of ethics and practice standards (Q5-6) 80 Fulfill ongoing continuing education requirements (Q5-7) 73 Complete a specified amount of practical financial planning related work (Q5-3) 73 Pass a comprehensive examination (Q5-2) 69 Complete a curriculum specific to financial planning (Q5-) 68 Percents show sum of two most important response categories on a 6-point scale. 27

30 Respondents with Written Financial Plan Developed with Involvement of Financial Professional Table 6.3 Preference for compensation of financial professionals (Q6) While 9% of respondents don t know, most respondents (38%) prefer to compensate financial professionals through fees set at a flat or hourly rate though another 33% of respondents favor fees calculated as a percentage of assets managed by a financial professional for a client. Compensation Percent Fees set at a flat or hourly rate 38 Fees calculated as a percentage of assets managed for a client 33 Commissions based on financial products they sell 23 Don t know 9 Data show percent of 284 respondents who selected each response category and, as a result, multiple responses were permitted and column does not sum to 00%. 28

31 7. Respondents Who Have Written Financial Plan In-Place With No Involvement Of A Financial Professional A total of 335 respondents have a written financial plan in-place at present though a financial professional was not involved in developing these plans. All tables in this section are based upon 335 respondents unless indicated differently in a table footnote. Table 7. Year current plan put in-place (Q7) A large proportion of respondents (56%) indicate that they developed their current financial plans in the last 8 years though 27% could not recall when their plan was developed. Year Put In-Place Percent 980 or before 98 to to to Can t recall 27 Table 7.2 Respondent benefit from having a written financial plan (Q8) A large proportion of respondents (48%) feel that they derive significant benefits from having a written financial plan. Written Financial Plan Beneficial Percent Definitely yes 33 Yes 5 Probably yes 25 Probably no 4 No 4 Definitely no 5 Don t know 5 29

32 Respondents with Written Financial Plan Developed without Involvement of Financial Professional Table 7.3 Benefits from having a written financial plan by respondent education, household income, and investable assets (Q8) Views on the benefits of having a written financial plan do not vary by respondent education, income, and asset levels. Education Income Assets Written Financial Plan Beneficial < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > Definitely yes 35% 35% 30% 3% 33% 42% 46% 33% 33% 44% Yes Probably yes Probably no No Definitely no Don t know Data collapsed from a 6-point scale. 30

33 Respondents with Written Financial Plan Developed without Involvement of Financial Professional Table 7.4 Importance of reasons for not working with a financial planner (Q9) When developing their financial plans, respondents choose not to work with a financial profesional for two major reasons: () expense of services (60%) and (2) uncomplicated financial affairs (55%). Reasons Percent Financial professionals are too expensive (Q9-2) 60 My financial affairs are not complicated (Q9-) 55 Many people claim to be financial planners, and it is hard to know who provides the best planning services (Q9-4) 40 Could not trust advice and recommendations of a financial professional (Q9-5) 22 Had a bad experience with a financial professional (Q9-3) 9 Percents show sum of two most important response categories on a 6-point scale. Table 7.5 Preference for compensation of financial professionals (Q2) While 27% of respondents don t know, most respondents with an opinion (45%) prefer to compensate financial professionals through fees set at a flat or hourly rate. Compensation Percent Fees set at a flat or hourly rate 45 Fees calculated as a percentage of assets managed for a client 23 Commissions based on financial products they sell 6 Don t know 27 Data show percent of 335 respondents who selected each response category and, as a result, multiple responses were permitted and column does not sum to 00%. 3

34 8. Respondents Who Have No Written Financial Plan In-Place A total of,22 respondents have no written financial plan in-place at present. All tables in this section are based upon,22 respondents unless indicated differently in a table footnote. Table 8. Work with financial planners in any capacity (Q22 and 22-) While many respondents (49%) were not able to identify a financial professional they have used in any capacity or as a primary service provider, it is clear that respondents have a tendency to work with a variety of different financial professionals to a lesser or greater degree. Financial Professionals Used in Any Capacity Primary Financial Professional 2 Accountant/CPA 9% 26% Banker 5 24 Financial advisor 7 2 Insurance agent 8 2 Stock broker 4 0 CERTIFIED FINANCIAL PLANNER professional 3 7 Attorney 3 5 Financial planner (not certified) 3 0 Another financial professional 7 3 Did not identify a financial professional Data show percent of,22 respondents who selected a response category and, as a result, multiple responses were permitted and column does not sum to 00%. 2 Primary financial professional was identified by respondents who used multiple financial professionals in any capacity and these percents do not include respondents who selected only one financial profession or used in any capacity. 32

35 Respondents with No Written Financial Plan Table 8.2 Satisfaction level with financial professionals used in any capacity (Q22-2) Respondents with experience in working with a financial professional in any capacity feel that accountant/cpas, bankers, CFP professionals, and financial advisors provide services that create the highest levels of satisfaction. Financial Professionals Satisfaction Accountant/CPA 65 Attorney 62 CERTIFIED FINANCIAL PLANNER professional 6 Financial advisor 58 Stock broker 53 Insurance agent 46 Banker 45 Financial planner (not certified) 39 Another financial planner 6 Percents are based upon 572 respondents and show sum of two highest satisfaction response categories on a 6-point scale. Table 8.3 Important reasons for not having a written financial plan (Q23) Respondents do not choose to develop a written financial plan for four major reasons () uncomplicated financial affairs; (2) expense of services; (3) preference to do their own financial planning; and (4) a sense of getting along fine without a written financial plan. Reasons Percent My financial affairs are not complicated (Q23-) 42 Too expensive to engage a financial planner and develop a plan (Q23-2) 42 Do my own financial planning on an informal basis (Q23-5) 4 Get along fine without a financial plan (Q Many people claim to be financial planners, and it is hard to know who provides the best planning services (Q23-7) 30 Do not really know what is in a financial plan and how it benefits people (Q23-6) 24 Could not trust advice and recommendations of financial professionals (Q23-4) 20 Percents show sum of two most important response categories on a 6-point scale. 33

36 Respondents with No Written Financial Plan Table 8.4 Important reasons for not having a written financial plan by respondent education, household income, and investable assets (Q23 and 23- through 23-4) For the most part, reasons for not having a written financial plan do not vary across respondent education, income, and asset levels with the exception of those with investable assets in excess of $ ML. These respondents are: (a) not likely to view their financial affairs as overly complicated; (2) not engaging a financial planner because of high perceived fees or expenses; (3) directly involved in their own financial planning on an informal basis; and (4) feel that they get along fine without a written financial plan. Education Income Assets Reasons < High school Some college College > < $50 K $50 K - $00 K $00 K - $50 K $50 K > < $00 K $00 K - $ ML $ ML > My financial affairs are not complicated 38% 44% 48% 4% 46% 45% 50% 44% 48% 58% Too expensive to engage a financial planner and develop a plan Do my own financial planning on an informal basis Get along fine without a financial plan Many people claim to be financial planners, and it is hard to know who provides the best planning services Do not really know what is in a financial plan and how it benefits people Could not trust advice and recommendations of financial professionals Percents show sum of two most important response categories on a 6-point scale. 34

37 Respondents with No Written Financial Plan Table 8.9 Preferences for compensation of financial professionals (Q25) While 40% of respondents don t know, most respondents with an opinion (30%) prefer to compensate financial professionals through fees set at a flat or hourly rate. Compensation Percent Fees set at a flat or hourly rate 30 Fees calculated as a percentage of assets managed for a client 20 Commissions based on financial products they sell 6 Don t know 40 Data show percent of,22 respondents who selected each response category and, as a result, multiple responses were permitted and column does not sum to 00%. 35

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