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Financial advice sees £47k wealth boost in a decade

Paloma Kubiak
Written By:
Paloma Kubiak

Taking financial advice can boost your coffers by £47,000 in just 10 years with those living more modestly more likely to benefit.

The ‘advice effect’ research reveals that for those who received advice between 2001 and 2006, their assets were boosted by an average £47,706 by 2016.

This included an extra £31,000 of pension wealth and over £16,000 extra in non-pension financial wealth.

And the benefit of financial advice is felt more for those of more modest means.

The research by Royal London and the International Longevity Centre revealed that ‘affluent’ groups saw a wealth uplift of 24% in financial wealth (shares, ISA, bank accounts) compared to 35% for non-affluent groups.

On pension wealth, the uplift is 11% for the affluent group compared to 24% for those living more modestly.

The wealth surge for those who take advice is likely due to the group investing in assets which offer greater returns but for greater risk. Taking advice is likely to add around eight percentage points to the probability of investing in equities.

The research also revealed that people are more likely to search for advice in their mid ‘20s to mid ‘30s as well as in their mid ‘50s to mid ‘60s, consistent with big life choices such as getting a mortgage or a pension.

However, while an estimated 17% of the adult population in Britain received expert financial advice between 2012-2014 – around 7.5 million people – the groups stated that people who may need advice don’t seek it. Around 40% of people who took out an investment product did so without advice, rising to 78% of those who took out a personal pension.

Another issue in the market is that people don’t understand how advice is paid for as 30% who received advice believed it was free.

Steve Webb, director of policy at Royal London said: “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, said: “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. And only a minority of the population has seen a financial adviser. We must now work together to get more people through the ‘front door’ of advice.”

*There are almost 60,000 entities that are authorised and regulated by the UK’s financial services regulators. See for more information.