A greater number of Indians today understand the value of financial planning than before. High inflation, rising interest rate and the cost of squeezing day-to-day budget in this global era of strained economic outlook have made people realise the importance of financial planning, according to a report by the Financial Planning Standards Board India.
A huge 80 per cent of those Indian consumers surveyed in the study feel that professional financial planning services has helped enhance their quality of life, while 75 per cent said they financially more confident. As for the retired, a massive 91 per cent of retirees surveyed who were advised by a certified financial professional said they felt they had enough money to last their retirement happily, the report titled FPSB Value of Financial Planning Research report 2023 said.
Also, 81 of the 100 women surveyed said they experienced and perceived a significant value in professional financial planning compared to those unadvised.
According to the report, financial planning has benefitted Indians the most in areas of investment planning, tax planning, retirement planning, and wealth creation.
The study included 1,011 Indian respondents aged over 25 years earning about Rs. 45 lakh per annum or hold investment assets over Rs. 25 lakh.
The sample included both advised and unadvised consumers. Advised consumers were those who are currently working with a financial planner, those who seek financial advice as needed and those who have received financial planning advice in the past three years but not now.
Unadvised consumers, on the other hand, are those who have never received financial planning advice from a financial planner or have not received financial advice in the past three years.
The study also analysed those consumers who work with a certified financial planner (CFP) professional.
The study examined the value of financial planning, measuring the financial and non-financial impact of financial planning across quality of life, financial confidence, financial satisfaction and experienced value, while debunking the myths surrounding financial planning.
About 76 per cent of those surveyed who had taken the services of financial planners said they were satisfied with their overall level of wealth, compared to 63 per cent of unadvised consumers. A higher proportion, 94 per cent of people who had sought advice from financial planners said they felt financially secure and a similar proportion, 95 per cent felt tangibly better off, the study said.
Though unadvised Indians recognised the benefits of financial planning, more than quarter thought it to be too expensive. A huge 27 per cent Indians consumers surveyed said they thought financial planning to be too expensive while a greater proportion (32 per cent), said they found it difficult to consult someone trustworthy. This despite the fact that 42 per cent of those surveyed said financial planning gave peveaace of mind (42 per cent) and greater wealth growth (43 per cent).
However, a mammoth 97 per cent of people who had taken the services of a financial planner said that the value of financial planning greatly outweighed the cost involve. All the advised consumer (100 per cent) said they trusted their financial planners to act in their best interest.
The study also revealed that 70 per cent of advised Indians with an income of Rs. 65 lakhs and less reported improved family life. More than a half of those advised consumers (53 per cent) reported improved social life, while 61 per cent and 62 per cent said it improved mental health and increased work satisfaction, respectively.
More than three-quarters (76 per cent) of advised consumers said they felt they could cope with any health issues compared to 71 per cent of unadvised Indians.
The study also revealed that in general advised consumers had the highest quality of life score (82/100) as against the unadvised consumers (76/100).
Krishan Mishra, CEO, FPSB India, who launched the report on the occasion of World Financial Planning Day on October 4, 2023 with the ceremonial bell ringing at the Bombay Stock Exchange (BSE), said that financial planning, especially when delivered by CFP professionals, plays a pivotal role in shaping a secure financial future.
“As we navigate the complex world of finance, let this report serve as a compass, illuminating the path towards financial well-being for all. Together, we can create a more financially secure future with correct and pragmatic advise,” he added.
Dante De Gori, CFP, CEO, FPSB Ltd. said: “In this current volatile climate, where unexpected events can send shockwaves through the global economy, the role of financial planning in general and of CFP professionals in particular has become even more critical in empowering consumers to make informed financial decisions and achieve their long-term goals, while enjoying a better quality of life.