TORONTO (Reuters) - More Canadians are embracing financial planning after the recent recession caught many of them unprepared, according to a Bank of Montreal survey released on Friday.
The Harris Decima survey commissioned by BMO found that 56 percent of 1,002 respondents had a financial plan in place at the end of 2010. That compares with 34 percent a year earlier and 25 percent 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 that the study also found that 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 percent having gone to a financial planner, the survey found.
Of those who did not have a financial plan, 63 percent said they felt they did not have enough money to put a plan in place, 35 percent said that a financial plan was not a priority, and 29 percent 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.
Dabu said that it is a common misconception that developing a financial plan requires a lot of money and extensive financial knowledge. “It’s all about taking small steps, putting the first pieces into place, and having a clear financial picture,” she said.
The survey also revealed a gender gap in terms of financial planning, with 61 percent of men saying they had a plan, compared with 52 percent of women.
It also found that those with a financial plan were more likely to make contributions to their registered retirement savings plan, at 58 percent, compared with 35 percent of those without a plan.
Dabu said that 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.
The online survey was conducted between November 15 and 24, and the results were weighted using the most recent census data to ensure responses were nationally representative.
Reporting by John McCrank; editing by Peter Galloway