Does Taking Financial Advice Make a Difference?

This article was originally published on Juno Wealth’s website. Juno Wealth was acquired by Progeny in February 2019.

Does taking financial advice make a difference to your income and assets?

A report into the value of financial advice was published earlier this month by ILC – UK. This is something we’ve written about before and is obviously going to be close to our hearts.

It’s a long and in-depth report and so, in this journal entry, we’re going to share some of the headlines and highlights.

The comprehensive ILC report was based on, amongst other things:

  • the largest representative survey of individual and household assets (the Wealth and Assets Survey),
  • an advanced technique called “propensity score matching” to compare similar groups to identify the impact, if any of financial advice, and
  • case studies from The Pensions Advisory Service.


The report starts by highlighting the fact that in the UK, failure to plan for the future and poor decision making, results in a high number of people having a significantly lower standard of living in retirement than they could have had.

The report also highlights the difficulties and complexities of modern day retirement planning and how average pension contribution rates are still far too low.

The report concludes that those who take financial advice are likely to have more assets (including pensions assets), as well as greater income in retirement.

Short, medium and long-term impact of financial advice

The report found the benefits of financial advice could be felt at different levels and points, but in particular, had a big impact when it comes to:

  • Day to day money management and tax planning
  • Investment advice
  • Retirement planning

What kind of difference does taking financial advice make?

The group examined the impact financial advice had in respect of two groups, the first described as affluent and the second described as getting by.

The findings were that those described as affluent:

  • Were 6.7% more likely to save when they took financial advice
  • Saved 17% more in liquid assets than those who didn’t take advice
  • Were 10.4% more likely to own equity assets
  • Had 16% more in pension assets

The group described as getting by:

  • Were 9.7% more likely to save when they took financial advice
  • Saved 39% more in liquid assets than their non-advised counter parts
  • Were 10.8% more likely to own equity assets
  • Had 21% more in pension assets

The impact on ownership of equity assets is significant because only 1 in 4 people over the age of 45 own equity assets.

The impact of financial advice for those aged 55 – 64 was the greatest, with the affluent and advised group accumulating on average £20,000 more than those who didn’t take advice. The getting by but advised group accumulated on average £15,000 more than those who didn’t take advice.

The report quantified the overall value of financial advice for those who took advice between 2001 and 2007 as equating to £41,099 in additional financial and pension assets (20% more).

Occupational pension wealth

The difference in pension accumulation between the advised and the non-advised was substantial.

The report concluded that those who took advice between 2001 and 2007 had on average £27,664 more in pension wealth by 2012/14 than those who didn’t.

For the affluent group, this was £30,882 and for the getting by group this was £25,859. The earlier people took advice, the more they benefited from it but even if you take advice in your 80s, the report concludes you’re likely to have £17,580 (getting by) and £23,600 (affluent) more in pension wealth.

For private pensions, the impact of financial advice for those who don’t withdraw their pension before 65, was estimated to be an additional £1,100 pa.

Peace of mind

The other good news is that 9 out of 10 people who had taken financial advice were satisfied with the advice given. Unfortunately (in the period 2012/14) only 16.8% of the population took advice.

People are more likely to take advice in their 20s and 30s (i.e. because they’re taking out a mortgage) than in their 50s and 60s.  Other key factors affecting whether or not you take financial advice are trust (of advisers) and your own financial capability.

Worryingly 40% of people who bought or took out some sort of investment product, didn’t take advice and neither did 78% of people who took out a pension. Unfortunately, we already know that (according to a report by Unbiased.co.uk) over a third (34%) of those who have purchased or arranged a financial product themselves have gone on to regret their decision.

Quantifying the value of financial advice is never going to be easy and some might say, it will always be open to subjective interpretation. But there is now a growing body of empirical evidence that demonstrates that if you take advice, you are likely to be significantly better off.

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and the value of investments can fall as well as rise. No representation is made that the stated results will be replicated.

Tracey Evans

Associate Director, Wealth

Tracey is passionate about helping clients to see their ‘big picture’ and has been doing so for nearly 30 years.

Learn more about Tracey Evans