Naz Financial

A Personal Financial Blog from Naz Miller

The ‘Value of Financial Advice’ Averages £40,000

value of financial advice | financial adviser | financial advisor

Research shows that those taking professional advice are significantly better off than their unadvised peers.

The 2017 report, ‘The Value of Financial Advice’  was produced by the International Longevity Centre – UK (ILC-UK). It found those taking financial advice 2001-7 built significantly more asset and pension wealth than their unadvised peers by 2014. Following another blog, giving reasons to use a financial adviser, this focuses on the value I can bring to clients.

The report analysed data from the largest survey of individual assets in Great Britain, called the Wealth and Assets Survey. It examined the impact of financial advice on two groups – the ‘affluent’ and the ‘just getting by’. The sample size was large;  5,000 people and households across the UK. Even allowing for the fact that some are more likely to seek advice than others, the research showed tangible benefits. It still showed that those who received advice did better than an equivalent group who didn’t.

The Data Supporting ‘The Value of Financial Advice’

The affluent group was formed of a wealthier subset of people. They were also more likely to have degrees, be part of a couple, and be homeowners. The ‘just getting by’ group was made up of less wealthy people. These had lower levels of education, were single, divorced or widowed, and renting.

They found the ‘affluent, advised’ accumulated on average £12,363 (or 17%) more in financial assets than the ‘affluent, non-advised’ group. Also £30,882 (or 16%) more in pension wealth, bringing the total value-add to £43,245.

Meanwhile the ‘just getting by, advised’ accumulated on average £14,036 (or 39%) more in financial assets than the ‘just getting by, non-advised’ group. Plus £25,859 (or 21%) more in pension wealth, making the total value added £39,895.

Those who had received advice in the 2001-2007 period also had more pension income than their peers by 2014. The ‘affluent, advised’ group earned £880 more per year than the equivalent non-advised group. The ‘just getting by, advised’ group earning £713 more than their counterparts.

So, Why Don’t More People Take Financial Advice?

Nevertheless, despite the clear benefits of taking financial advice, under 17% of people saw an adviser in the years 2012-2014. Also, ‘The Value of Financial Advice’ found that even among those who took out an investment product in the last few years, around 40% didn’t take advice. This rose to 78% of people who took out a personal pension.

‘The Value of Financial Advice’ concluded that the two main determinants of whether people sought advice were:

  • whether the individual trusted an Independent Financial Adviser to provide advice; and
  • the individual’s level of financial capability.

Ben Franklin, Head of Economics of Ageing, at ILC-UK made this comment, which I support:

“Our results show that those who take advice are likely to accumulate more financial and pension wealth.

But the advice market is not working for everyone. A high proportion of people who take out investments and pensions do not use financial advice. Only a minority of the population has seen a financial adviser. Since advice has clear benefits for customers, it is a shame that more people do not use it.”
If you know anyone that could benefit from professional financial advice, please introduce me to them.

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Naz Miller

I'm Naz and I'm a Financial Adviser. Prior to working in private practice, I spent 34 years working at Lloyds Bank in Cambridge and surrounding areas. My work has always focused on helping clients achieve their long-term financial objectives.

Glossary of Personal Financial Terms

AAA Rating

In short, AAA ratings (‘triple-A‘ ratings) are the highest credit rating available for an investment, such as a bond or company.

AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.

Similarly, the AA+ rating is issued by S&P (Standard and Poor) and is similar to the Aa1 rating issued by Moody’s. It comes with very low credit risk and indicates the issuer has a strong capacity to repay.