From profit to peace of mind: The true value of financial advice

What does financial advice mean to you? Do you take professional advice? And if so – why and when? Does your approach match those of other savers? Two recent reports have shone a light on the answers to these questions.

Here at Wellesley, we often extoll the advantages of financial advice – we firmly believe it’s something that everyone can benefit from. But we are, of course, biased – which is why we love seeing research that supports our clarion call for savers to take firmer control of their financial futures.

This winter has seen two new reports published, which delve into the reasons why people take advice, and also how COVID-19 has changed the way in which clients engage with their advisers.

Here are four key things the reports found:

1.Taking advice can boost investment returns by up to 30%

Let’s start with the bottom line – taking advice can benefit you financially. In September 2020, the ‘Value of Advice’ report from St. James’s Place and consumer financial website Boring Money estimated that financial advice can boost investment returns by 10-30%, after surveying 10,000 UK adults and 2,000 fund investors.

These findings support the idea that without advice, you’re far more likely to purchase products which may be unsuitable for your needs, or potentially invest in asset classes that don’t match your attitude to risk or investment time horizon. By receiving advice, this can help you make better decisions that are tailored to each client as an individual, as every person’s circumstances and goals are unique.

2.Key life events have a major influence

The ‘Value of Advice’ report also explored the main reasons why clients see a financial adviser. We’ve previously written about how “big life events” can trigger clients to seek advice, and this report supports the idea that such events still play an important role:

  • 56% said they saw an adviser due to retirement
  • 51% said they saw an adviser after receiving an inheritance.

Although it’s easy to see why a major life event would encourage you to look at your finances, the earlier you take advice, the better. By creating a long-term strategy, if you experience a so-called “big event” later down the line, you and your adviser can evaluate its impact in the context of your long-term goals.

In the report, 58% of clients said they saw an adviser because they needed a review – we’d like to see this number rise, and the percentage of clients seeking advice as a result of a major event dropping.

3.COVID-19 has changed what clients want from their adviser

Perhaps the biggest finding from the ‘Value of Advice’ report is the rise of technology. The COVID-19 pandemic has accelerated changes in the way we work, shop, and live – so, it makes sense that it has also led to changes in the way consumers receive financial advice.

According to the report, almost a quarter (23%) of advice users say the pandemic has changed what they want from their adviser – they now want more frequent and proactive communications, instead of an annual review. The report suggested this could see clients achieve better outcomes, as advisers are able to provide quicker updates on portfolio performance and markets, and therefore take advantage of new opportunities.

This ad hoc communication could take the form of a ‘virtual face-to-face’ meeting – with 63% of those surveyed saying they now feel more positive about video call apps, such as Zoom, as a way of communicating with their financial adviser.

Holly Mackay, Founder of Boring Money, commented:

“Instead of a gradual evolution towards being able to speak to an adviser remotely, the rug was pulled from under people’s feet and their expectations changed overnight. Clients now want to use Skype and Zoom to chat with their adviser, and they demand more frequent contact – with updates on how their investments are doing in challenging market conditions.”

Here at Wellesley, your adviser will have already talked with you about how you wish to communicate – and how frequently – but, if the pandemic has made you more open to using different methods of contact, such as Zoom, then please do let us know!

4.The ‘value’ of advice reaches beyond the financial benefits

A second recent report looks at how we can determine the ‘value’ of advice. The International Longevity Centre (ILC) published new research in November 2020, which found that people who take financial advice are not only more confident about their financial future, but also appear to be better prepared for retirement than those who don’t.

Arunima Himawan, Research Fellow at ILC, said:

“In a time where so much responsibility is put on us as individuals to plan for an uncertain future, financial advice has never been more important.

“Having someone who can guide us along the way and can point us in the right direction is crucial. It’s not just about maximising retirement income, but about making a plan, feeling in control and having peace of mind.”

At Wellesley, we pride ourselves on our holistic approach to financial investment. We’ll look at the whole of your financial situation – your goals, values, family and assets – in order to create a bespoke personal plan. With regular reviews, we build strong relationships with our clients and can easily help them adapt to unexpected events – giving them the peace of mind that they are in safe hands.

The bigger picture

It’s brilliant to see new research looking at the true value of financial advice – particularly the ILC report that provides more insight into the non-financial benefits of an ongoing relationship with a financial adviser.

When looking at what determines ‘value’, we believe that a holistic approach gives clients the confidence that they are taking the best possible care of their financial needs – giving them and their loved ones security for the future.

The rise in technology only serves to strengthen the bond between client and adviser – and if you would like to connect more via video chat, please do let your adviser know!

We’ll leave the closing words to Eddie Grant, Director of Technical Advice and Development at St. James’s Place:

“For many, an ongoing service and the development of a relationship grounded on proactive, personalised financial advice can be just as important as being in the best-performing fund possible.”

Are you looking for financial advice? Here at Wellesley Wealth Advisory, we are there to help you, whichever stage of your financial life you’re in. Contact us today.

Sources:

  • ‘Value of Advice’, St. James’s Place and Boring Money, September 2020. Survey of 10,000 UK adults and 2,000 fund investors, with further qualitative interviews carried out with advice users at different life stages.
  • ‘Understanding the non-financial benefits of financial advice’, International Longevity Centre UK, November 2020. Survey of 32 adults.

Sources:

1 AA Financial Services, a national survey of 2,110 adults, June 2020
2 Office for National Statistics, Households’ Saving Ratio, September 2020
3 Moneyfacts, Savers urged to act quickly to secure best fixed-rate account deals, September 2020
4 Candid Money, ‘How Much?’ Savings Calculator
5 Candid Money, ‘How Much?’ Investment Calculator
*This figure is for example purposes only and not guaranteed. What you will get back depends on how your investment grows and on the tax treatment of the investment.  You could get back more or less than this.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place or Wellesley Wealth Advisory.