Why Investors Worldwide Need Financial Planning
Do you want to better manage your finances but aren't sure where to begin? You're not alone. Global consumer research from the Financial Planning Standards Board reports that only 19% of people around the world feel successful at sticking to their financial strategies.
Investors in the United States tell a similar story. It's hard to feel confident about making the most of your earnings when faced with competing priorities, such as navigating health care costs and financial emergencies, as well as managing debt while saving for retirement.
So, what should investors do? Start with a financial plan. Creating a financial plan helps investors understand their financial picture and sets both short- and long-term goals.
[See: 7 Habits of Successful Investors.]
Think of a financial plan as a map charting the way to the financial future you want to attain. When you have a plan in place, it gives you the confidence to know which road to follow to reach your goals.
Those who have a financial plan are nearly three times more likely to feel very confident in their ability to achieve their goals. However, many people hesitate to create a plan because they do not believe they have the knowledge or time necessary to put a comprehensive plan in place.
That's why CFP Board was thrilled to join counterparts at the Financial Planning Standards Board and the global community of more than 181,000 certified financial planner professionals to celebrate World Financial Planning Day on Oct. 2.
Now in its third year, World Financial Planning Day helps raise awareness of the value of financial planning, of having a financial plan and of working with a competent and ethical financial planner who puts their clients' interests first.
Need for Financial Planning Globally
Investors across the globe have one thing in common -- they benefit from creating a financial plan.
In Australia, 20% say that poor financial planning is one of their biggest financial regrets in life so far. In Canada, 40% of investors rank money as their greatest stress, but 60% feel they do not have the necessary knowledge to adequately plan their financial future.
Compared to those without financial plans in place, Canadians who created a comprehensive financial plan are significantly more confident about how prepared they are to deal with financial challenges they may face in life (66% versus 35%).
Need for Financial Planning in the U.S.
In America, many investors are tasked with managing several financial priorities at once. The benefits of working with a financial planner are clear: investors feel more confident about their chances of success.
[See: 7 Easy Ways to Invest Without Much Money.]
Nearly half of U.S. investors with financial plans say they are confident in their ability to pay off their student debt while still being able to save for retirement.
Similarly, earlier this year, a Citizens Bank Wealth Management survey found that 87% of investors with a financial plan report a high level of confidence and 75% have a positive outlook on their financial security.
It's OK to Ask for Help
Just as a doctor works with you to develop a wellness plan, a financial professional supports your financial goals by creating a financial plan that can help you avoid debt, decide smart ways to invest your hard-earned money, navigate major life changes and avoid financial setbacks.
Tackling a financial plan on your own can be intimidating but working with a professional can give you peace of mind. A financial planner brings their deep experience to your relationship, giving you confidence in your financial future.
The confidence extends through a potential recession. While 55% of all U.S. investors believe a recession will occur in 2020, adults in the U.S. working with a financial advisor (67%) are much more likely to say they would feel prepared for a recession than those who are not working with a financial advisor (38%).
Tips for Working With a Financial Planner
Working with a professional empowers investors to take control of their financial lives, better plan for the unexpected and achieve their financial goals.
[See: Beware of These 7 Blind Spots in Your Portfolio.]
To maximize the results of working with a financial planner, commit to the process and follow these tips to avoid common mistakes:
-- Set measurable goals.
-- Understand the effects of each financial decision.
-- Periodically re-evaluate your financial plan.
-- Start planning as soon as possible.
-- Be realistic in your expectations.
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