Financial advice increases average wealth by £47,000 over a decade, according to a new report in Money Marketing.
Royal London commissioned the International Longevity Centre to quantify the value of financial advice for people’s overall income in the early years of the millennium.
The report is an update of a study from two years ago and the results come from detailed analysis of the government’s Wealth and Assets Survey which has tracked the wealth of thousands of people in two-year periods since 2004-06.
The wealth uplift from advice comprises an extra £31,000 of pension wealth and over £16,000 extra in non-pension financial wealth.
One of the key findings from the research is that the proportionate impact of taking advice is greater for those of more modest means.
For the ‘affluent’ group identified in the research, the uplift from taking advice is an extra 24 per cent in pension wealth, compared with 35 per cent for the non-affluent group.
On non-pension wealth, the uplift is 11 per cent for the affluent group compared with 24 per cent for the non-affluent.
The research also found that those who were still taking advice at the end of the period had pension pots on average 50 per cent higher than those who had only taken advice at the beginning of the period.
Royal London director of policy Steve Webb says: “Many of those who receive financial advice can testify to its value but it has always been difficult to quantify. This research uses the latest statistical methods to identify a pure ‘advice effect’ and it is strikingly large.
“If financial advice can add £40,000 to your wealth over a decade compared with not taking advice, it is incumbent on government, regulators, providers and the advice profession to work together to make sure that more people are sharing in this uplift.”
International Longevity Centre Director David Sinclair adds: “The simple fact is that those who take advice are likely to be richer in retirement. But it is still the case that far too many people who take out investments and pensions do not use financial advice. We must now work together to get more people through the ‘front door’ of advice.”