More Canadians embracing financial planning: BMO

Those with plan more likely to contribute to RRSP

(Reuters) - More Canadians are embracing financial planning after the recent recession caught many of them unprepared, according to a Bank of Montreal survey.

More than one-half (56 per cent) of 1,002 respondents had a financial plan in place at the end of 2010, compared to 34 per cent one year earlier and 25 per cent the year before that.

The increase can be tied to tough lessons learned over the past couple of years, when many people found themselves out of work or saw their retirement savings depleted by market turmoil, said Caroline Dabu, vice-president of retirement and financial planning strategy at BMO Financial Group.

"People have recognized that it's more important than ever to stay on top of your finances," she said, adding the study also found people who have a plan are far more confident of achieving their financial goals than people who do not have one.

Nine of 10 respondents with a financial plan said they consulted someone when putting the plan together, with 73 per cent having gone to a financial planner, found the survey.

Of those who did not have a financial plan, 63 per cent said they felt they did not have enough money to put a plan in place, 35 per cent said a financial plan was not a priority and 29 per cent said they did not know where to begin in creating a plan. Respondents were able to list more than one reason for not having a plan.

It is a common misconception that developing a financial plan requires a lot of money and extensive financial knowledge, said Dabu. "It's all about taking small steps, putting the first pieces into place and having a clear financial picture," she said.

There is also a gender gap in terms of financial planning, with 61 per cent of men saying they had a plan, compared with 52 per cent of women, found the survey.

Those with a financial plan were more likely to make contributions to their registered retirement savings plan, at 58 per cent, compared with 35 per cent of those without a plan.

A financial plan must: define short-term and long-term savings goals; monitor daily cash flow and asset allocation; and provide a contingency plan in case of job loss, illness, or other changes in circumstance, said Dabu.

Latest stories