What’s the Real Value of Financial Advice?

There is now mounting empirical evidence that financial advice can provide significant benefits for people of all ages and backgrounds. While many individuals may believe that they can manage their finances on their own, research now shows that those who seek professional advice tend to have better outcomes and more financial security.

According to a study conducted by Royal London and the International Longevity Centre, those who received financial advice were able to accumulate, on average, around £47,000 more in retirement savings than those who did not. The research also found that those who received financial advice were more likely to feel confident about their financial future, with 94% stating that they felt more secure and in control of their finances after seeking advice.

The value of financial advice is particularly evident when it comes to retirement planning. The same study found that those who received financial advice were more likely to have made plans for their retirement, with 80% having a pension plan in place compared to only 52% of those who did not receive advice. The study also found that individuals who received financial advice were more likely to hold a diversified portfolio and were less likely to make impulsive investment decisions based on short-term market fluctuations.

However, despite the clear benefits of financial advice, many people in the UK still do not seek professional guidance. According to the study, only 17% of individuals had received financial advice in the past three years. One of the main reasons for this may be the perceived cost of financial advice. Many people still believe that financial advice is expensive and therefore not accessible to them. However, the study found that the benefits of receiving advice tended to far outweighed the costs. Those who received financial advice were found to have, on average, an additional £2,500 per year of retirement income compared to those who did not receive advice. This means that the benefits of financial advice can more than offset the costs over time.

It is also worth noting that financial advice does not only benefit those with high incomes or significant wealth. The study found that individuals from all income brackets benefited from receiving financial advice, with those in the lowest income bracket having the largest increase in retirement savings after receiving advice.

Another study by Royal London added additional weight to these findings. They surveyed thousands of people to compare those that used a financial planner to those who did not. Their findings showed that financial advice can deliver more than just financial benefits. It can also help to improve emotional wellbeing. Those who received regular financial advice felt more in control of their finances, less concerned about their retirement funding, more financially secure, better organised and more confident about the future than those who did not.

These studies make it clear that the value of financial advice cannot be overstated. The benefits are clear, with those who seek advice having better outcomes and more financial security than those who do not. While the perceived cost of financial advice may be a deterrent for some, the benefits usually far outweigh the costs in the long run. With the help of a professional financial planner, individuals of all backgrounds can improve their financial wellbeing, take control of their money, grow their wealth and plan for a more certain future.

Some of the key findings: