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Is financial advice worth it?

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We look at whether the benefits of financial advice outweigh the costs

1st September 2023

Navigating the world of personal finance and investments can be a daunting task, and many individuals often wonder, “Is financial advice worth it?”

The short answer is: Generally, yes. Various studies have shown that individuals who seek financial advice tend to achieve better long-term financial outcomes compared to those who don’t. However, when considering straightforward cash products such as savings accounts or Cash ISAs, the value of seeking advice is likely to be limited.

In this article, we’ll explore the tangible benefits of seeking financial advice in, highlighting how professional guidance can significantly enhance your financial well-being and help you achieve your goals.

Understanding Financial Advice

Financial advice involves seeking the expertise of a qualified and regulated financial adviser to help you make informed decisions about your money. These professionals have a deep understanding of various financial products, investment strategies, and the intricacies of the UK’s financial landscape.

The Value of Financial Advice

  1. Tailored Financial Plans: Financial advisers create personalised financial plans that consider your unique circumstances, goals, and risk tolerance. They help you outline a roadmap for your financial future, including strategies to grow your wealth, save for retirement, and achieve other financial objectives.
  2. Optimised Investment Portfolios: Investing wisely is crucial for long-term financial success. Financial advisers can recommend investment portfolios that align with your goals, time horizon, and risk profile. They monitor and adjust these portfolios as needed, ensuring your investments stay on track.
  3. Tax Efficiency: UK tax laws are complex, and tax efficiency is a key consideration in financial planning. Financial advisers can help you navigate the tax implications of various financial matters, including pension contributions, ISAs, and Capital Gains Tax.
  4. Retirement Planning: Retirement planning should be a top priority. Financial advisers can help you estimate your retirement income needs, review your pension options, and create a strategy to ensure you have a comfortable retirement.
  5. Risk Management: Financial advisers assess your insurance needs, such as life insurance, critical illness cover, and income protection. They ensure you have adequate coverage to protect your financial interests and those of your loved ones.
  6. Peace of Mind: One of the most significant benefits of financial advice is peace of mind. Knowing that your finances are in capable hands can reduce stress and anxiety, allowing you to focus on other aspects of your life.

The Proof

The International Longevity Centre (ILC) is the UK’s specialist think tank on the impact of longevity on society. In an ageing society, it is vital that people are able to plan for their financial security in retirement. As such, they produced a report that quantified the value of taking financial advice for people’s overall financial outcomes.

In their research, the ILC found:

  • Receiving professional financial advice between 2001 and 2006 resulted in a total boost to wealth (in pensions and financial assets) of £47,706 in 2014/16.
  • The benefits of financial advice are potentially greater for those we term “just getting by” than for those we consider “affluent”: the former would have seen a a 24% boost to their pension wealth compared to 11% for more affluent groups (those most likely to be advised).
  • Evidence also suggests that fostering an ongoing relationship with a financial adviser leads to better financial outcomes. Those who reported receiving advice at both time points in our analysis had nearly 50% higher average pension wealth than those only advised at the start.

Further Reading

This information is based on our current understanding and is subject to change without notice. This article is for general information only and does not constitute advice.  Whilst information is considered to be true and correct at the date of publication, changes in circumstances, regulation and legislation after the time of publication may impact on the accuracy of the article.

The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

We have local offices in Edinburgh, Falkirk, Glasgow, Livingston and Stirling and provide Financial Advice throughout Scotland. If you would like to speak to an Independent Financial Adviser (IFA) then book your free initial consultation.

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