"Studies show that people who take financial advice are considerably better off than those who don’t."
Please be aware the below blog is older than 12 months, therefore the information may not be relevant or up to date.
Is it worth it? That’s a question I’m often asked when speaking with potential clients. Naturally, I think paying for professional advice is money well spent. But for those of you who aren’t wholly convinced don’t take it from me: read on to see what the research says…
There have been a number of studies over the years that have all shown that people who take financial advice are considerably better off compared to those who don’t. In fact, the International Longevity Centre (ILC) carried out research in 20171 and then revisited it in 20192 and found that those who took financial advice between 2001 and 2006 received, on average, an overall boost to wealth of £47,706 during 2014/16.
The study also found that maintaining an ongoing relationship with a financial adviser led to even better financial outcomes. Those who took advice during 2006/8 and 2014/16 ended up having nearly 50% higher average pension wealth than those who only took advice at the start of the study….pretty impressive!
It's not just additional money those who take advice benefit from. The ILC carried out further research which shows that receiving advice has a positive impact on mental wellbeing as it boosts confidence, provides people with greater control of their finances and gives increased peace of mind.
The research went on to say that the immediate impact of the “non-financial benefits of advice could be more important for wellbeing and mental health than any financial benefits.”3
Like the ILC, I find that great ongoing relationships between adviser and client are key, which is why I’ll always take the time to fully understand your needs and will tailor my advice accordingly. What you want from your finances is individual to you. My job is to get to know you well enough to fully understand what you hope to achieve for you and your loved ones. A one-size approach certainly does not fit all!
Alongside this ongoing support, clients tell me I provide additional value to them at their planning meetings by:
- Always using their existing provisions first before considering starting a new plan
- Checking how any personal changes in income or capital wealth may impact their current provisions or tax situation
- Explaining in simple terms how the UK Government Budget announcements impact them by way of welfare or income, capital or inheritance tax changes
- Providing a timely reminder so that they don’t miss out on valuable allowances (such as ISAs) that once gone, are gone forever
- Making sure they don’t miss out on getting money back that might be owed, such as tax relief on pension and retirement planning
- Rebalancing their assets so they’re always comfortable with the risk they take when investing, while ensuring they don’t miss out on potentially better returns
- Ensuring they do not miss out on getting a better return than they should for the level of risk they take
- Reassuring them they are not taking unnecessary risk with their investments
- Placing their assets in the right name, ownership and tax shelter, so that they legally and ethically ensure they don’t pay too much tax when they want to spend them or pass them on.
And, while it’s perfectly possible to not use an adviser, using one will certainly make achieving your financial goals less stressful, easier and ultimately more successful.
Looking at the numbers alone proves that taking financial advice is extremely beneficial. Couple that with the additional feelings of wellbeing and sense of security advice provides, and I hope that you’ll agree that financial advice is emphatically worth the cost!
By Daren Wallbank
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 14/03/2023
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested. Past performance is no guarantee of future returns.
Originally published May 13 2022.
1 https://ilcuk.org.uk/the-value-of-financial-advice/
2 https://ilcuk.org.uk/what-its-worth/ p3 and p6
3 https://ilcuk.org.uk/peace-of-mind/ p6
