esearch by the International Longevity Centre-UK (ILC-UK) has shown that people who receive financial advice could become significantly wealthier than those who don’t.
The research paper “The value of financial advice” backed by Royal London, was first published in 2017 and updated in November 2019. It looked at individuals of different financial standing, split between 2 groups – the ‘affluent’ and ‘just getting by’. Both groups who received advice ended up significantly wealthier than their non-advised counterparts.
Those who received Financial Advice added up to 39% more to their liquid assets and 21% more to their pension wealth
How much richer could a financial adviser make me?
According to the report, the ‘affluent’ grew their liquid financial assets by 17% more and pension wealth by an average of 16% more than the non-advised ‘affluent group. Whilst the ‘just getting by’ group saw the biggest gains, adding 39% more to their liquid assets and 21% more to their pension wealth than their non-advised peers.
The added wealth equated to an extra £43,245 for the ‘affluent’ set and £39,895 more for those deemed ‘just getting by’.
Read the full report
Unsurprisingly, the report found that 9 in 10 people are satisfied with the advice received, with the clear majority deciding to go with their advisor’s recommendation. Although worryingly it showed that 78% of people taking out a personal pension do not take advice and could be missing on as much as £880 per year versus those that receive advice*.
Financial Advice improves levels of saving and investment
It wasn’t just levels of wealth that increased, the report showed that people who received financial advice were up to 9.7% more likely to save and up to 10.8% more likely to invest in the equity market**. This higher propensity to save and invest is likely to have an even bigger impact on these individuals’ wealth over the longer term as they continue to build their wealth.
How much does a financial adviser cost?
The cost of a financial adviser varies but normally you’ll pay a fee based on the amount of money you have invested and fees for the investment products that you choose. A good financial adviser will balance the cost of the products against the likely return, so whilst you may end up paying more for some investment vehicles, they may offer value for money in terms of the return on investment.
It’s always worth reviewing your investments, especially pensions, every couple of years to check that the costs you are paying still offer the best value, there are some really good new products that have come onto the market in recent years that offer excellent value for money. If you’re paying a financial adviser to manage your money, this kind of regular review will be included in the price you are paying.
“The findings were clear” said Simon Garber, Managing Director of 2020 Financial Ltd, “if you want to create good financial habits, and build your wealth, then work with a Financial Adviser.”
If you’d like to get your financial plans on track, 2020 Financial are offering a Free Pension appraisal for a limited time book yours now.
* Those who had received advice in the 2001-2007 period also had more pension income than their peers by 2012-14:
- The ‘affluent but advised’ group earn £880 (or 16%) more per year than the equivalent non-advised group.
- The ‘just getting by but advised’ group earn £713 (or 19%) more per year than the equivalent non-advised group.
** The report also finds that financial advice led to greater levels of saving and investment in the equity market:
- The ‘affluent but advised’ group were 6.7% more likely to save and 9.7% more likely to invest in the equity market than the equivalent non-advised group.
- The ‘just getting by but advised’ group were 9.7% more likely to save and 10.8% more likely to invest in the equity market than the equivalent non-advised group
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