FECIF Secretary General
Does financial advice provide value? It sure does!
A recent study proved that:
• Professional financial advice can and does significantly enhance clients’ wealth.
• That this benefit occurs even in a commission environment.
• And it is most valuable for less wealthy clients.
Quantifying the value of advice has always been somewhat difficult, not least as some of that worth derives from less tangible aspects, but this was the task that was set by UK insurance company Royal Life to the research department at the International Longevity Centre (ILC). And the results appear to be quite definitive.
“What it’s worth: Revisiting the value of financial advice” from the ILC suggests that, holding other factors constant, those who took advice around the turn of the century were on average significantly better off than those who did not, a decade later.
Relevant elsewhere in Europe?
The study analysed professional financial advice that was provided to members of the public between 2001 and 2006. In other words, well before the onset of the UK’s RDR and thus within a transparent commission environment, much like the rest of the EU now. This would suggest that the conclusions and findings are applicable across all Member States and beyond.
The magnitude of the value
According to the research, the advice resulted in a total boost to wealth (in pensions and financial assets) of £47,706 by 2014/16. This wealth “uplift” from advice comprises, on average, an extra £31,000 of pension wealth and over £16,000 extra in non-pension financial wealth...