The Great Recession left many American families struggling to make ends meet, but those who have prepared a financial plan feel more confident and report more success in managing money, savings and investments than those who have not.
Half of Americans who have developed a financial plan — either on their own or with the help of an adviser — are more likely to feel that they are on track to meet all their financial goals, including saving for retirement or unexpected events, according to a report released last week by the Consumer Federation of America and the Certified Financial Planner Board of Standards Inc.
In contrast, less than one-third of people without a financial plan said they feel confident about meeting their financial goals.
Those who take the time to create a financial plan to manage their income, savings, debt and insurance needs reported that they live as well as more-affluent nonplanners.
For example, 48% of people with income of between $50,000 and $99,000 who have a financial road map described themselves as living comfortably — the same percentage as people with income of $100,000 or more who don't have such a plan.
“Having a financial plan increases one's confidence and effectiveness in managing, borrowing and saving money,” said Stephen Brobeck, the CFA's executive director.
WORRIED ABOUT LOSING MONEY
Despite the clear value of financial planning, only 31% of the more than 1,500 respondents in the May telephone survey said that they have a comprehensive plan, while about two-thirds — 65% — indicated that they follow a plan for at least one of their savings goals.
Although technological advances have made accessing and analyzing financial information easier, a majority of the respondents said that they find investing complicated and are worried about losing their money.
In addition, more than half of respondents said that it's difficult to know whom they can trust to provide financial advice.
“Consumers understandably are more nervous about investing their money, given recent revelations about financial fraud, manipulation and abuse of clients,” said Kevin Keller, chief executive of the CFP Board.
Recent reports from the Federal Reserve show the devastating effect of the financial crisis on the middle class.
The median family — richer than half of American families and poorer than the other half — had a net worth of $77,300 in 2010, compared with $126,400 three years earlier. That means they have no more wealth today that they did in the early 1990s and that nearly two decades of economic gains have been wiped out.
mbfranklin@investmentnews.com Twitter: @mbfretirepro
