It can be difficult to put a value on a service such as financial advice, where there are so many variables to appraise, however a recent report by the International Longevity Centre (ILC) think-tank has found that those who have sought professional financial advice are better off by an average of £40,000 compared to those who did not take advice. Increases in liquid assets and pension wealth were identified for both the ‘affluent but advised’ and the ‘just getting by but advised’ groups surveyed, with greater savings and equity investment levels also apparent.
The boost to pension pots that professional advice can bring is also the finding of research carried out by Unbiased. They state that those taking advice will save an average of £98 per month more, which equates to an additional £3,654 per annum in retirement income, based upon a pension pot of £100,000.
The Unbiased survey also finds that taking financial advice earlier is a factor in boosting people’s confidence in their readiness to retire, and that around 34% of those who make financial decisions without first seeking advice will go on to regret those choices.
These are interesting findings, and would suggest that ‘value’ does not simply relate to money – in addition to obvious ‘values’ such as return on investment, the avoidance of mistakes and the peace of mind that comes from making the best practical choices are clearly of great worth to people.
The most revealing statistics come from research conducted by Old Mutual Wealth and YouGov and Aegon respectively: 90% of people who see a financial adviser regularly feel the advice has benefited them, but only 8% of people actually speak to a financial adviser about their financial decisions. An interpretation of this could be that assumptions many people make about the merits of financial advice may not be accurate.
Changing those assumptions through clear and practical education may be a way to improve advice take-up in the UK and this, in turn, will lead to an improvement in the financial outlook for many more people, given the statisics above.