Too few Canadians have or understand in-depth financial plans: study

Very few Canadians have a good understanding of what a financial plan is, nor how such a plan can help them, according to a new study that IG Wealth Management released on Friday to mark Financial Literacy Month.

The study revealed that Canadians who have a holistic financial plan — one that factors in multiple elements, including budgeting, debt, insurance, tax, estate and retirement planning, as well as investing — are three times more likely to feel “very confident” that they will achieve their goals when compared with Canadians who don’t have a detailed plan.

Yet, only one-third of respondents felt they knew “a lot” about what a financial plan is and how it can help them, and the vast majority of those polled (80%) said plans are all about portfolio management. 

Further data found that while 61% of Canadians reported having a financial plan, most said the plan focused almost exclusively on investments. The study also showed that almost three-quarters of Canadians who said they use a financial advisor and have a plan reported that the plan focuses exclusively on investment.

“We know that a truly personalized holistic plan can play a significant role in helping realize your financial goals,” said Damon Murchison, president and CEO, IG Wealth Management. 

“Despite this there remains many misconceptions about not just the value a plan can provide, but also about its components,” he added. “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.”

The study was based on a poll of 1,503 Canadians between Sept. 16 and 20. Results were weighted on the basis of age, gender and region, using the latest Statistics Canada data, to be representative of the population as a whole.

Maddie Johnson

Maddie is a freelance writer and editor who has been reporting for Advisor.ca since 2019.