The value of advice: 4 benefits of using a financial adviser

One of the most common concerns about using financial advisory services is cost. This is often because individuals are purchasing intangible items, such as the potential for better investment returns.

However, the benefit of taking financial advice runs deeper than simply the potential for better investment returns. Having a personal financial plan created with the support of a professional financial adviser has several important advantages.

1. Clear goals

Spending time with an adviser on a regular basis will make you think hard about what you are trying to achieve with your money. Are you thinking of retiring early, helping children with the cost of getting on the property ladder or with university costs? A financial adviser will challenge you to assess your goals and help you create a realistic, achievable plan to help achieve your objectives.

2. Regular reviews

Whether you are someone who likes to look at the value of your investments on a regular basis or someone who prefers to invest and then forget in the short term, a professional adviser will look to have regular updates – typically annually. These regular updates aim to keep track of your finances and understand changes to your circumstances which may affect your goal or changes to legislation which could have significant implications on issues such as tax.

3. Tax efficiency

The UK’s tax system is complex and difficult to navigate and errors in understanding could cost you thousands of pounds in unnecessary tax. A financial adviser will be aware of the traps and will be able to make your finances as tax-efficient as possible giving you the best opportunity to reach your goals.

4. Product knowledge

A complex tax system is overlaid with a myriad of product providers, many of which have additional rules in place on how their plan works against the legislation in place. An adviser will regularly review the market and carry out time-consuming research, narrowing down the range of product solutions that are suitable for you and your view of risk.

How much could you save with financial advice? 

A long-running study by the International Longevity Centre found less than 17% of people saw an adviser between 2012 and 2014 and savers are missing out as a result.

Interestingly, the study (published in July 2017), found that individuals who took financial advice between 2001 and 2007 had significantly higher savings by 2012-2014 than those who did not. Of course, this period included the financial crash of 2008-09 when investment returns suffered significantly.

The study split people into two groups – the “affluent” and those who are “getting by”. The affluent group were more likely to have degrees, be part of a couple, and be homeowners, while those getting by were more likely to have lower levels of education, be single and rent.

The report found in the affluent group, those who took advice accumulated on average £12,363 more in liquid financial assets than those who didn’t, and £30,882 more in pension savings. In the “getting by” group, those taking advice saved on average £14,036 more in liquid financial assets than those who didn’t, and £25,859 more in pension wealth.

For those who had retired, people who took advice earned up to £880 more per year than their non-advised peers.

In summary

In a challenging society where earnings are stretched to the limit, it is vital that people can plan for their own financial security in retirement. The study demonstrated that expert advice provided by professionals delivers real value in improving people’s finances.

For further advice please get in touch with a member of our team.

The Financial Conduct Authority does not regulate tax advice.