Personal Financial Planning: Determination of Customer Profiles, Needs and Viewpoints

Personal financial planning is a service that springs from the need for objective and centralized advice on a wide range of areas such as investments, insurance, money management, taxes, estate planning and others. A personal financial planner fits each one of those individual areas into a well- balanced, integrated plan, after a comprehensive financial analysis is undertaken— guided by a family\u27s goals, attitudes and objectives. The purposes of this study were (1) to identify characteristics which discriminate between households that are interested and those not interested in obtaining a personal financial plan; (2) to determine the relative importance of the various differentiating characteristics; (3) to develop demographic and life style profiles of consumers that reported an interest in obtaining a personal financial plan; (4) to relate several aspects of personal financial management and behavior to interest in obtaining a personal financial plan; (5) to assess the needs and viewpoints of consumers regarding personal financial planning; and (6) to determine how attitude towards personal financial planning is related to interest in obtaining this service. The data was collected by means of a questionnaire mailed to participants of the Arkansas Household Research Panel during the Fall, 1979. Various analytical tools were utilized to analyze the data, including discriminant and factor analyses, t-tests, and Chi Square tests of independence. The major findings are briefly summarized as follows: the discriminant function correctly classified 68 percent of households into either of two groups: (l) those interested in obtaining a personal financial plan, and (2) those not interested. Attitude towards financial planning was the most important discriminating variable among the groups, with age being second, but negatively related to interest in financial planning. The typical head of household interested in obtaining a personal financial plan was found to be 25-35 years old, well educated with at least a bachelor’s degree, renting the home in which he/she lives, and with the spouse also employed. This person holds cosmopolitan views, is an avid information seeker, self-confident, community minded and a credit user. The individual\u27s interest in financial planning is increased by being engaged in a discussion about his/her financial goals and objectives with a financial planner. Additionally, those persons making real estate investments are more interested in financial planning than those who do not make real estate investments. The data implied that consumers interested in obtaining a personal financial plan attribute a high degree of importance to their active participation in determining the broad goals required for developing a financial plan. Individuals believe they too are excellent sources for developing financial plans, along with bankers, accountants, attorneys, and certified financial planners. The study also suggests that financial planners should base their fees on a sliding scale according to income; that is, the higher the clients income, the more he/she should be charged for a personal financial plan. Finally, it was determined that households interested in obtaining a personal financial plan have a more favorable attitude towards the concept of financial planning than those who are not interested in this service. In conclusion, the findings should provide valuable information to assist the financial planning industry to identify prospective customers more easily