View From The North

Despite Advantages Of Financial Planning, Myths Still Persist

Canadians with a plan are three times more confident they’ll reach financial goals, yet just one-third of Canadians have a good understanding of what a financial plan is

A new study from IG Wealth Management examines Canadians’ misconceptions about financial planning and the steps that can be taken to help bring about more complete understanding.

TORONTO, Nov. 12, 2021 /CNW/ – To mark Financial Literacy Month, IG Wealth Management (“IG”) today released a study on Canadians and financial planning. The results find that, despite the value a financial plan can provide in helping achieve one’s goals, myths continue to exist around what a plan actually is and the role one can play in building confidence and achieving financial well-being.

The study, conducted by Pollara Strategic Insights for IG, noted that Canadians who have a holistic financial plan (i.e. one that brings together multiple dimensions of their financial world, including budgeting, debt, insurance, estate and retirement planning as well as investing and an overall tax strategy) are three times more likely to feel very confident that they will be able to achieve their financial goals than Canadians who do not.

Further, the study revealed the following:

  • Only one-third of Canadians feel they know “a lot” about what a financial plan is and how it can help them.
  • More than 80 per cent reported that a financial plan is all about their investments, with very few appreciating that a truly effective financial plan covers off much more than just portfolio management.
  • And, while 61 per cent of Canadians reported having a financial plan, the majority stated that their plan was primarily “one-dimensional” and focussed almost exclusively on their investments.

“We know that a truly personalized holistic plan can play a significant role in helping realize your financial goals– we see this everyday in the work we do with our clients,” said Damon Murchison, President & CEO, IG Wealth Management. “Despite this there remains many misconceptions about not just the value a plan can provide, but also about its components.”

As an industry we need to step up our efforts on not just educating Canadians about the value of financial planning, but in raising our game in the design and execution of financial plans as well...

Of concern, the study found that almost three-quarters of Canadians who both use a financial advisor and have a financial plan reported that their plan focusses exclusively on investments.

Mr. Murchison noted that, while investment management is important, to be truly effective a financial plan must bring together all dimensions of a person’s situation, “The era of the ‘stock picker’ is over. Any financial advisor who wants to maximize the value they provide their clients must work with them on all dimensions of their financial world and understand how everything is connected.”

“As an industry we need to step up our efforts on not just educating Canadians about the value of financial planning, but in raising our game in the design and execution of financial plans as well,” concluded Mr. Murchison.

 

 

 

About IG Wealth Management
Founded in 1926, IG Wealth Management is a national leader in delivering personalized financial solutions to Canadians through a network of advisors located across Canada. In addition to an exclusive family of mutual funds and other investment vehicles, IG offers a wide range of other financial services. IG Wealth Management has $116.5 billion in assets under advisement as of October 31, 2021 and is a member of the IGM Financial Inc. (TSX: IGM) group of companies. IGM Financial is one of Canada’s leading diversified wealth and asset management companies with approximately $271 billion in total assets under management and advisement as of October 31, 2021.
About the Pollara Study
This study was conducted with an online sample of n=1,503 and was conducted between September 16th and September 20th, 2021. Results from a probability sample of this size could be considered accurate to within ±2.5%X percentage points, 19 times out of 20. Results have been weighted on the basis of age, gender and region, using the latest StatsCan data, to be representative of the Canadian population as a whole.

 

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