How Taking Financial Advice Can Add More Than £40,000 To Your Savings

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We have all hired professionals to help us with various aspects of our lives – lawyers, plumbers, personal trainers – and willingly pay for the privilege. It is therefore surprising that so many of us baulk at the prospect of paying for advice on something as important as securing our financial future.

Research by unbiased.co.uk uncovered that savers who seek out professional financial advice could add as much as £3,654 per year to retirement income, whilst a new report by the International Longevity Centre, supported by Royal London, found that those who had an ongoing relationship with an adviser had pension wealth, on average, nearly 50% greater than those who took one-off advice.

This new research would also appear to support the findings of Vanguard Asset Management’s ‘Adviser’s Alpha’ programme, a programme that enables advisers to put a number on the value they add for their clients by demonstrating ‘the difference between the return that investors might achieve with an adviser versus the return they might have achieved on their own’.

The in-depth research project found that financial advisers typically add around 3% a year to their clients’ investment returns, demonstrating that there is real value to be gained by seeking professional advice.

The research by unbiased also revealed that the earlier you seek financial advice the better prepared you will be for your retirement.

Age when first sought retirement advice % who felt well prepared for retirement % who did not feel well prepared for retirement
18-24 71 11
25-34 52 15
35-44 41 25
45-54 39 29

When asked why they hadn’t sought financial advice, 40% stated that they felt confident in their own decision-making capabilities. Yet, ironically, over a third (34%) of those who had purchased or arranged a financial product themselves had gone onto to regret their decision.

So what is stopping us from seeking such invaluable professional advice?

The first barrier would appear to be the perceived ‘cost’ of advice, with many average income households feeling that financial advisers are a privilege for an affluent few. However, the research by the International Longevity Centre, which compared affluent investors with those ‘just getting by’, found that the ‘just getting by’ group benefitted more from taking financial advice than their advised affluent counterparts, further championing the cause for lower income households to seek advice.

Below is a summary of the findings showing the additional returns gained by those who sought financial advice when compared to an equivalent demographic who didn’t.

 

Increase in Liquid Financial Assets vs Non-advised Increase in Pension Wealth vs Non-advised Increase in Pension Income (2012-2014) Per Annum vs Non-advised
Affluent but Advised £12,363 (17%) £30,882 (16%) £880 (16%)
Just Getting By but Advised £14,036 (39%) £25,859 (21%) £713 (19%)

As the above table shows, the ‘just getting by’ group experienced larger percentage gains across all three areas of their finances than the ‘affluent’ groups. Finally, the report also concluded that 9 out of 10 people who had sought advice were satisfied with the advice received, with the majority opting to follow their adviser’s recommendations.

Glen Bastick, Financial Adviser at Finura, comments: “The most interesting insights from the research from Vanguard is placing context around the value of an adviser’s advice by translating this into pounds and pence. This is further supported by the clear demonstration that the earlier you can engage with an adviser, the higher the chance you have of fulfilling your lifestyle and retirement goals.”

If you would like to find out how Finura can help boost your savings and pensions income, please contact us here.

Articles on this website are offered only for general information and educational purposes. They are not offered as, and do not constitute, financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.

Past performance is not a guide to future performance and may not be repeated. Capital is at risk; investments and the income from them can fall as well as rise and investors may not get back the amounts originally invested.

You are now departing from the regulatory site of Finura. Finura is not responsible for the accuracy of the information contained within the linked site.

Sources: https://adviser.royallondon.com/pensions/viewpoint/2020/january/putting-a-number-on-the-value-of-financial-advice/
http://www.standardlife.co.uk/c1/news-and-blog/the-real-value-of-financial-advice/

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