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The value of financial advice

When we think about the value of financial advice, it can be hard to quantify it. After all, you often cannot be sure how your fortunes would have fared, or if your circumstances would be different if you had not worked with a financial adviser. However, research has shown that it does have real, tangible benefits for clients, as well as being valuable in other areas too.

Despite evidence demonstrating that financial advice can be valuable, nearly half (48%) of adults in the UK have never taken advice. Whilst the cost of advice may be a factor for some, this is not always the key factor. A third believe that they can manage their finances perfectly well themselves, with this rising to 57% of over-65s.

The financial benefits of advice

Research completed by the International Longevity Centre highlights how financial advice can help your wealth grow:

  • Those that received professional financial advice between 2001 and 2006, on average, saw their pensions and financial assets grow by £47,706 in 2014/16
  • Pension savers classed as ‘just getting by’ saw a 24% boost to their pension fund, compared to 11% of those considered affluent
  • Focussing on financial assets, the benefit of financial advice was £16,715 in 2014/16 compared to £13,888 in 2012/14, with a greater impact for ‘affluent’ groups

Whilst the cost of financial advice may be a prohibiting factor for some, the results show that the benefits can outweigh the initial and ongoing costs.

Whether you choose to receive ongoing advice, with regular reviews, or advice at key moments in your life, both can be useful. For example, you may choose to review your finances with a professional when you start a family or as you approach retirement. However, the research found that individuals who saw a financial adviser several times throughout the research period had nearly 50% more pension wealth on average than those that seek advice only once.

Financial advice can help you make the most of your wealth and put you on the right path for achieving aspirations.

The non-financial benefits of advice

The research clearly highlights why financial advice can be useful in terms of growing your assets and pensions but it is far harder to measure the non-financial benefits. Often, these are intangible, yet they can be just as important as the increased value of assets.

Among these benefits are:

  • Time-saving: Ensuring you are getting the most out of your money can be time-consuming. You may not have the time or inclination to keep track of your investment performance, forecast your pension income or find the best place to put cash savings. Working with a financial planner can take these responsibilities out of your hands. Your time is valuable and by handing over some of the financial decisions and research to an adviser, you are able to focus on what is most important to you, whether that is your career, family or something else.
  • Confidence: Financial decisions can have long-term impacts. As a result, it is not surprising that some people can feel apprehensive about their decisions or worry that they have made the wrong choice. Having someone to talk through your decisions and the different options can provide peace of mind. Knowing that a professional has looked at the pros and cons can give you confidence, knowing you have picked a path that is right for you and your goals.
  • Security: Often when we make financial plans ourselves, we forget to look at what will happen if something does not go to plan. Would you still be on track if your income were to stop for six months? Could you still leave an inheritance if care were needed? As part of the financial planning process, we will help you consider what kind of safety net can provide you with security. For some, this may be holding a greater portion of liquid assets, for others, it could include taking out some form of financial protection.
  • Keeping up to date with changes: Legislation and regulation are constantly changing. If this is not part of your job, it can feel impossible to keep up with these and know how to incorporate them into your financial plan. Working with a financial planner can take this weight off your shoulders. As part of your annual review, we will explain how change has had an impact on your initial plan. You will also be able to access advice if you have concerns following changes too.

If you would like to review your financial plan or learn more about how advice can benefit you, please get in touch. Our goal is to create bespoke financial solutions that reflect your aspirations.

Please note: The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.