Financial planning based on poorly understood concepts of inflated costs in the future are too addling for most investors, according to a survey from Farmers New World Life Insurance Co.

The survey asked people how helpful the idea of "present and future value" was for financial planning, and 41% found it of little help in setting retirement goals. Furthermore, 72% found the results of such an analysis "frightening" because they seemed so unrealistic.

The company’s solution is "financial blueprint," a system that focuses on different life stages rather than the fuzzier concept of future value. "When presented with the life-stage idea, consumers embraced it. Sixty-plus percent said they felt traditional financial planning approaches aren’t working," said Mike Keller, vice president of marketing at Farmers.

The reality is that people’s income and needs change during different life stages, a fact that is not reflected in the more common planning models. "Income increases over time, yet most systems don’t acknowledge it. People adjust their finances, goals and desires over time based on life stage, but this is not taken into account by most systems," Keller said.

Also, people have a hard time conceptualizing a life stage that is far down the road, so skipping all the way to retirement may seem confusing and less personally relevant, he added.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.