We know that financial advice can change lives and help people achieve their goals. Yet, research from network Openwork found that more than two in five people don’t know how to access advice. It could mean they’re missing out on opportunities, taking too much risk, or worrying about their circumstances without support.
Despite technology making it easier than ever to search for businesses, some people are concerned about starting their financial advice journey online. Even with a rise in the number of robo-advisers, face-to-face contact is often preferred. Some 73% of survey respondents said they’d rather speak to a human financial adviser.
That’s understandable, to get the most out financial planning you need to share personal information and discuss your worries, aspirations, and long-term plans. A conversation about what you want to achieve is just as, if not more so, important as assessing assets.
In our experience, people considering financial advice will often speak to family, friends, or colleagues first. Referrals play an important role in ensuring financial advice is accessible.
A quarter of people could be missing out on pension boosts
The Openwork research highlights why financial advice is crucial, whether delivered on an ongoing basis or as a one-off.
One in four surveyed had said they’d not started saving for retirement yet. Worryingly among these, two out of five said they won’t start until they are aged 55 or older. When it comes to saving for retirement, starting early is key. As contributions are invested, compounding means money can grow at a quicker rate over the years. It means individuals have to contribute less to their pension to achieve the same goal overall.
The findings also highlight that many could be missing out. Most employees will now be automatically enrolled into a pension. Opting out of this means they miss out on both employer contributions and tax relief, effectively ‘free money’ that goes towards retirement. Pensions are an efficient way to save for later life.
A lack of planning is likely contributing to the fact that two-thirds don’t believe they will be able to retire by their target date and 20% fear they will be unable to afford to stop working.
Retirement planning is just one of the areas that financial planning can help with. With a focus on lifestyle goals, it can help families get more out of their money and give them the freedom to pursue aspirations.
Does financial advice really have a positive impact?
The short answer is ‘yes’.
Surveys show that financial planning can improve overall wellbeing. It can mean less stress and anxiety about financial affairs and an ability to focus on what’s most important in life. A report from Aegon shows that clients who take financial advice are more likely to:
- Enjoy life because of the way they are managing money (34%) compared to those who don’t see a financial adviser (25%)
- To agree they are doing everything to secure their financial future (49%) compared to just 37% of those who haven’t seen a financial adviser.
On the other hand, those who haven’t taken financial advice are more likely to worry that either their money won’t last, or that they couldn’t afford a major unexpected expense. Some can then become distracted at work due to financial concerns. Financial worry can affect wellbeing and health.
While financial returns are focused on when discussing advice, it’s the benefits it can bring to lifestyles that are typically of greater value to clients.
Of course, there’s a financial benefit too. Working with someone who can recommend the right products for their goals, or ways to take advantage of tax benefits, can deliver a monetary boost.
Research conducted by Royal London found, on average, those who received professional financial advice between 2001 and 2006 resulted in a total boost to wealth of £47,706 in 2014/16. What may surprise some is that those deemed ‘just getting by,’ rather than ‘affluent’, potentially benefit more.
Referring friends and family to our services
With many unsure of where to access financial advice, a recommendation can help secure the finances of family and friends. If you know someone who could benefit from our services, please pass on our details. We work with clients to create bespoke financial plans that help them take positive steps towards their goals.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Please note that the information provided in this article was correct at the time of publishing.