The value of advice
What is financial advice actually worth?
It is a fair question to ask before you speak to anyone. Here is what independent research has measured, where the value comes from, and what it does not prove.
- £47,706average extra wealth after about ten years among people who took advice
- +24%pension wealth for people of modest means who were advised
- +35%other financial wealth for the same group
- 50%larger pension pots among those who kept an adviser, compared with one-off advice
The evidence
What the research measured
The most rigorous UK study is What it's worth: revisiting the value of financial advice, published in 2019 by the International Longevity Centre UK and supported by Royal London. It used the Office for National Statistics' Wealth and Assets Survey, which has followed thousands of households since 2004.
The researchers compared people who took professional financial advice between 2001 and 2006 with people in similar circumstances who did not, and looked at what each group had a decade later. Holding other factors constant, those who were advised had on average £47,706 more: about £31,000 in pensions and £16,000 in other financial assets.
Two findings surprise people. First, the benefit was proportionally greater for those the study called "just getting by" than for the affluent. Second, people still seeing an adviser at the end of the period had pension pots around 50% larger than those who had been advised only at the start.
Where the difference comes from
- Saving more, sooner. Advised households put more away, and made fuller use of pension tax relief and employer contributions.
- Being invested. Advice raised the likelihood of holding shares by around eight percentage points. Over ten years the gap between cash and investments compounds.
- Using the rules. ISAs, pension allowances, carry forward, spousal transfers: the tax system rewards people who use them in the right order.
- Staying the course. The most expensive mistakes are usually made in falling markets. A plan, and someone to talk to, makes them less likely.
What it does not prove
We would rather you had the caveats than a headline. The study describes averages for a large group over one particular decade; it is not a forecast for you. The comparison of ongoing with one-off advice was not adjusted for other differences between those groups. The figures are before the cost of advice. And the report was supported by a pension provider with an interest in the advice market, though the analysis itself rests on official survey data.
Taken together, the fair conclusion is a modest one: for most people with a decision to make about pensions, investments, tax or inheritance, a conversation with a regulated adviser is likely to be worth having, and the first one costs nothing.
Sources: International Longevity Centre UK, What it's worth: revisiting the value of financial advice (2019); Royal London summary of the findings, 28 November 2019.
An illustration
Apply the study's averages to your own savings
This simply multiplies your figures by the average uplifts the researchers found. It shows the scale of what was measured. It is not a prediction.
Reading this figure
Questions
Before you speak to an adviser
Is financial advice worth paying for?
The best UK evidence comes from the International Longevity Centre's study What it's worth, which followed thousands of households in the official Wealth and Assets Survey. People who took advice between 2001 and 2006 had, on average, about £47,000 more in pensions and financial assets a decade later than similar people who did not. That is an average across a large group, not a promise for any individual.
Does advice only help wealthy people?
The same study found the proportional benefit was larger for people of more modest means: pension wealth 24% higher and other financial wealth 35% higher, compared with 11% and 24% for the affluent group.
Where does the value actually come from?
Less from picking investments than most people expect. The research points to saving more, being invested at all rather than holding cash, using allowances and tax relief properly, avoiding expensive mistakes in falling markets, and having a plan that is reviewed. People who kept an ongoing relationship with an adviser had larger pension pots than those advised only once.
What does a financial adviser cost?
Advisers must tell you their charges before you commit. The first consultation with any adviser we introduce is complimentary. After that, typical arrangements are a fixed fee for a piece of work, or a percentage of the money being arranged followed by a smaller yearly percentage for ongoing advice. Always ask for the total in pounds.
How do I know an adviser is properly regulated?
Anyone giving regulated financial advice in the UK must be authorised by the Financial Conduct Authority and appear on the Financial Services Register. We send you your adviser's name, firm and registration before your call so that you can check for yourself.
The first conversation is on us.
Choose a time for a complimentary video call with an FCA-regulated adviser who suits your situation. No obligation.