New research shows clients on average £40,000 better off than unadvised peers

New research by the International Longevity Centre – UK (ILC-UK) reveals that those who receive financial advice accumulate more liquid financial assets and pension wealth than their unadvised peers.

The report, titled ‘The Value of Financial Advice’, analysed data from the Wealth and Assets survey – the largest representative survey of individual and household assets in Great Britain. It examined the impact of financial advice on two groups, the ‘affluent’ and the ‘just getting by’.

The report found that:

• The ‘affluent but advised’ accumulated on average £12,363 (or 17%) more in liquid financial assets than the ‘affluent and non-advised group’, and £30,882 (or 16%) more in pension wealth, making a total of £43,245.
• The ‘just getting by but advised’ accumulated on average £14,036 (or 39%) more in liquid financial assets than the ‘just getting by but non-advised group’, and £25,859 (or 21%) more in pension wealth making a total of £39,895.

The report also found 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.

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.
  In addition, 9 in 10 people were satisfied with the advice received, with the clear majority deciding to go with their adviser’s recommendation.

Steve Webb, director of Policy, Royal London added that the research shows “the very real return to obtaining expert financial advice.

“What is most striking is that the proportionate impact is largest for those on more modest incomes. Financial advice need not be the preserve of the better off but can make a real difference to the quality of life in retirement of people on lower incomes as well. The evidence shows that when people take advice they are overwhelmingly satisfied and benefit as a result. More needs therefore to be done to overcome the barriers to advice.”

Read the full article on Professional Paraplanner here.