CFP Clients Stick to Strategy

As economic turbulence has been on the rise, many financial planners say they are seeing an increase in potential clients.

More than a quarter (27%) of financial planners reported a significant increase in potential clients, and 39% report a moderate increase, according to a survey from Certified Financial Planner Board of Standards, Inc. (CFP Board).

“Hanging Tough” 

Many certified financial planners said their clients are staying the course with their strategies—and the planners themselves are doing the same in their own portfolios, according to the survey. However, close to half (45%) of clients are moving their assets to lower risk investments. Others are taking advantage of the buying opportunity of lower stock prices (40%).

When asked what actions their clients are taking with their financial plans, 78% of respondents said “standing firm with existing strategies;” 57% said “reviewing asset allocation;” 48% said “reviewing financial goals;” 45% said “moving assets to lower-risk positions;” 40% said “taking advantage of investment opportunities;” and 37% said “rebalancing portfolio,” according to a press release about the survey results.

When asked what actions they are taking with their own financial plans, 78% of respondents said “standing firm with existing strategies;” 45% said “moving assets to lower-risk positions;” 42% said “taking advantage of investment opportunities;” 20% said “reviewing asset allocation;” and 13% said “reviewing financial goals,” according to the survey.

“Most clients of CFP professionals are hanging tough in the face of the current financial crisis, with many actually taking advantage of lower stock prices to increase their holdings,” said CFP Board CEO, Kevin R. Keller, in the release. “The significant increase in the number of potential clients who have contacted CFP professionals during the past few weeks shows that more Americans are recognizing the value of working with financial planners who are held to rigorous standards of ethics and competence.”

Rescue Ahead? 

Only about one in 10 financial planners (11%) said the financial system rescue bill will “definitely” improve the economy. About four out of 10 financial planners (42%) think the financial rescue bill will be “moderately successful in reviving the economy,” compared with a third who say the bill is “not the right approach to reviving the economy,” according to the survey results.

“It also is striking to see the extent to which CFP certificants are taking a cautious, wait-and-see attitude when it comes to the financial ‘rescue bill,’ with relatively few willing to flatly predict that it will be successful in improving the economy,” Keller added.

Almost half of financial planners (46%) think that about two years will pass “before consumers see a positive impact on their financial situation as a result of the actions taken by the government.” Nearly a third of respondents (32%) expect the lag to last two to five years; 4% said five to seven years; 2% said more than seven years; and 16% said they were not sure, according to the results.

Interestingly, most of the CFPs (about 75%) say the government’s reaction to the financial situation hasn’t affected their vote in the upcoming election. The majority (about 72%) also think the media coverage has exaggerated recent economic uncertainties.

The survey was based on responses submitted online October 9 to 16 by 5,261 certified financial planners. The full results are available here.