Nearly nine-in-ten American households are engaged in some type of formal or informal financial planning, but the extent of that planning varies between those who are comprehensive planners and those who are basic or limited planners or who have no plan a all.
Nearly nine-in-ten American households are engaged in some type of formal or informal financial planning, but the extent of that planning varies between those who are comprehensive planners and those who are limited planners or have no plan at all, according to a new research sponsored by the Consumer Federation of America and Certified Financial Planner Board of Standards.
Only one-in-five household decision makers are comprehensive planners who have taken a methodical approach to financial planning, the report found. Ten percent do virtually no financial planning at all. The research further identifies nearly four-in-ten (38 percent) of households as basic planners, while 33 percent are identified as limited planners.
Comprehensive planners have a financial plan that covers basics such as the household budget but also such things as retirement saving, insurance, and an emergency fund. Two-thirds (67 percent) of comprehensive planners use a financial professional with fiduciary accountability, meaning they are duty-bound to put their client’s financial interests first.
Eight-in-ten of basic planners, the report finds, have a plan for one or more specific savings goals, though only 35 percent have a comprehensive plan, while another 31 percent say they are likely to make a plan in the coming year. Fewer than half (41 percent) say their household busdget is written down or stored in an electronic format.
The limited planners either have a household budget or plan to address at least one individual savings goal, such as saving for retirement. Most, admirably, have no credit card debt or they have a plan to pay off this debt.
Not surprisingly, the more extensive the financial plan, the better prepared individuals feel to achieve their financial goals or meet financial emergencies. Nearly all (94 percent) of comprehensive planners self-report this confidence compared with 81 percent of basic planners and 70 percent of limited planners. Only 53 percent of non-planners express this confidence.
Nearly half (48 percent) of Millionaire investors surveyed by Spectrem’s Millionaire Corner said they have received advice about a written financial plan from their primary advisor, but one-third said they did not need this type of advice.
Just over half (53 percent) report their financial advisor reviews their plan with them at least semi-annually, while almost one-third (32 percent) review their plan with their advisor annually.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.