4 Financial Planning Profiles That Determine Consumers’ Future Success

Additionally, while higher income households are more likely than lower income households to plan, more than half of comprehensive planners have annual incomes below $100,000.

“Low to moderate income workers usually don’t have access to employer-sponsored plans,” Brobeck noted. “But they do have access to saving accounts. Even if it’s $25 a month, it will greatly help them. It’s not about the amount so much as it is the behavior.”

Extensive analysis of the four distinct financial planning profiles includes: 

1. Comprehensive Planners (19%): All members of this group have a comprehensive financial plan that goes beyond a simple household budget to cover things like retirement savings and insurance.  Two-thirds (67%) of comprehensive planners used a financial professional with fiduciary accountability, specifically a certified financial planning professional or a registered investment advisor, to help prepare such a plan. These households have specific savings goals as well, with 88% having a specific plan for retirement and 80% having a plan for emergency savings.
2. Basic Planners (38%): The large majority of basic planners (80%) have a plan for one or more specific savings goals, though only 35% have a comprehensive plan that organizes these plans, with another 31% saying they are likely to make a plan in the coming year. While two-thirds (66%) say they have a household budget, fewer than half (41%) say that budget is written down or stored in electronic format.
3. Limited Planners (33%): A large majority of limited planners (69%) either have a household budget or a plan to address at least one individual savings goal – typically for retirement savings – but not both.  And very few limited planners (11%) think they will make a comprehensive plan in the next year.  But most (91%) either have no credit card debt or have a plan to pay off this debt.
4. Non-Planners (10%):  This group does virtually no financial planning. Nine in ten (92%) say they have no plan for any specific savings goal, and virtually none (99%) think they will create a comprehensive financial plan in the next year.  They also are the group with the most difficulty managing credit card debt.  Four in 10 have credit card debt that needs to be paid off and fewer than half with this debt have a plan to pay it down.

The higher one’s household income and level of education, the more likely one is to engage in financial planning, the survey finds. Among comprehensive planners, close to half report annual household incomes of at least $100,000 and about half have a four-year college degree. Among non-planners, more than half half have incomes under $25,000 while more than two-thirds have a high school education or less.

But these correlations are far from perfect, the survey adds.  The majority of comprehensive planners are middle class, it notes. In fact, a quarter have incomes below $50,000.

“The failure of middle-class incomes to grow is as big a problem as any facing the country today,” Brobeck concluded.