A new report has found that people who receive financial advice are on average £40,000 better off than those who don’t.
Research, in the form of a report called ‘The Value of Financial Advice’ was published by the International Longevity Centre and the pension provider Royal London and found that those who received financial advice between 2001 and 2007 accumulated significantly more liquid financial assets and pension wealth than those who didn’t by 2012 to 2014.
The report examined the impact of advice on two groups: the ‘affluent'(wealthier and more likely to homeowners) and the ‘just getting by'(less wealthy, more likely to be single and renting) and found that the ‘affluent but advised’ accumulated on average 17 % (£12,363) more in liquid financial assets than the affluent and non-advised group and a further 16 % (£30,882) more in pension wealth – making a total of £43,245.
Meanwhile the ‘just getting by but advised’ accumulated on average 39 % ( £14,036) more in liquid financial assets than the just getting by but non-advised group, and 21 % (£25,859) in pension wealth, bringing a total of £39,895.
The report highlighted that those who had received advice in the 2001 to 2007 period also had more pension income than their peers by 2012 to 2014. The ‘affluent but advised’ group earned £880 (16 %) more per year than the equivalent non-advised group while the ‘just getting by but advised’ group earned £713 (19 %) more a year.
The Director of policy at Royal London and former pensions minister, Sir Steve Webb said: “This powerful research shows for the first time 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 majority of people who buy investment and pension products don’t use financial advice and only a minority of the population has seen a financial adviser. The findings of this report show that advice has clear benefits and so it is a great shame that more people do not use it and we need to rise to the challenge to get more people through the ‘front door’ in the first place.
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Please Note: The Financial Conduct Authority does not regulate tax advice. Tax laws can change. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long term investment and should fit with your overall attitude to risk and financial circumstances.