Royal London recently published a report on the value of financial advice, this was based on the findings by the International Longevity Centre, who conducted this research on Royal London’s behalf. The results were quite interesting, and support what we already know and our company’s values.
As we know, in an ageing society its important that people are able to plan for their ‘financial security’ in retirement.
In the UK, there are a number of problems relating to the provision of an adequate income in retirement.
The ageing population means that less people are paying tax and national insurance contributions than the current working population, which adds strain to the provision of State Pensions (meaning the benefits could be reduced and the ages deferred).
This along with the fact that the State Pension is unlikely to provide an adequate income alone, highlights the need for private provision.
Another issue of the ageing population is that people are more likely to need their pension/investment assets to last longer.
The volatile markets are also a key issue and financial advice can help navigate around these issues.
The report published demonstrated that expert advice provided by financial advisers delivers real value in improving peoples financial positions.
There is widespread evidence of people failing to plan and save for retirement, participate in the stock market and to diversify their investments appropriately.
An ongoing relationship with a financial adviser has been demonstrated to help in each of these areas.
Receiving professional financial advice between 2001 and 2006 resulted in an increased wealth of £47,706 in 2014/16 (in pensions and investments).
The evidence suggests that an ongoing service provided by a financial adviser leads to better financial outcomes, and those who receive financial advice have nearly 50% higher average pension assets than those who only received ‘one off’ advice (from data complied in 2001/2006 and again in 2014/2016).
The findings clearly demonstrate that financial advice from professionals is valuable to individuals and there is potential for a wider group of people to benefit from advice than do so currently.
Andrew Lloyd 31/01/2020
Data Source: Royal London/ILC: ‘What its worth, revisiting the value of financial advice’ report, published December 2019. The International Longevity Centre (ILC) is the UK’s specialist think tank on the impact of longevity on society.