The survey report focuses on many aspects such as financial confidence, quality of life, financial satisfaction, etc. The FPSB report also talks about the myths surrounding financial planning among Gen Y (millennials) and others that actually stops them from getting advice from a financial planner.
Here is a look at the four financial planning myths the FPSB report has debunked.
Myth Number 1: Financial planning is only for the rich
There is a myth among individuals that financial planning is needed by rich individuals only. According to the report, when individuals (earning Rs 65 lakh or less) were receiving advisory from a financial planner, their quality of life was three points higher than those individuals who were not under any advisory from a financial planner. Further, the financial confidence of those receiving financial advisory is four points higher than those not receiving any financial advisory. In the case of financial satisfaction, individuals having a financial advisor is 6 points higher than those not receiving any advisory.
Source: FPSB reportUnadvised individuals understand the importance of financial planning. “Less affluent unadvised consumers view financial planning as helping them address their key unmet needs of improved decision-making confidence, financial well-being and peace of mind,” mentioned the report.
Source: FPSB report
Myth 2: Financial planning is only needed at retirement
The second myth is that financial planning is needed only at the time of retirement. The survey report busted this myth and concluded that financial advisory has numerous benefits including improvement of quality of life, financial satisfaction and financial confidence. Further, the earlier one starts financial planning, the more advantageous it is.
Source: FPSB report
“Not only does financial planning provide value across age generations but the younger you are, the greater the perceived benefit from financial planning,” mentions the report.
One of the most desired needs that millennials have is for a regular flow of money to live on and live a desired lifestyle. 41% of millennials want to make sure that they have a regular flow of money to maintain their lifestyle.
Source: FPSB report
Myth 3: Financial planning costs more than it’s worth
The third myth is that financial planning costs more than what it is worth. According to survey report, “A key barrier is affordability, but the evidence shows that most advised clients believe that the value of financial planning delivers benefits that far outweigh its cost and that financial advice has made them tangibly better off.”
Identifying the gap between individuals wanting financial advice but not getting one, the report cited one of the most common barriers. It said, “The top reason cited for remaining unadvised is the difficulty in finding someone that one can trust, as well as finding and assessing a suitable financial planner.”
Source: FSPB report
On the contrary, those who found a trusted financial planner who advises them correctly about financial aspects were satisfied with the service. “9 in 10 individuals believe financial advice provides more value than it costs, and it has made them tangibly better off,” as per the survey.
Myth 4: Financial planners lack objectivity
The final myth is that financial planners lack objectivity. On the one hand, unadvised individuals have trust issues about finding a good financial planner who can plan their financial affairs. On the other hand, those individuals who found a trusted financial planner choose to fully trust them with financial planning.
“Unadvised consumers have concerns about finding a trustworthy financial planner. However, the evidence shows that advised consumers overwhelmingly trust their CFP professionals and highly value them for putting their interests first,” mentioned the report.
Source: FPSB report
However, along with proving the myths false, some shocking revelations or trends were found out. One of the major trends which the report observed was that a significant portion (41%) of millennials (Gen Y) were worried about having a regular flow of money to live on.
For this survey’s India component, FPSB recorded inputs of 1,011 Indian residents over 25 years old and earning over Rs 45 lakh or holding over Rs 45 lakh investments in various assets.