Savvy people use financial advisers…and they’re richer for it
By Dave Chessell
What makes someone decide to get financial advice? It seems it’s not about how much wealth they have but how much ‘financial capability’ they possess, according to the findings of a research report from the International Longevity Centre – UK (ILC-UK), supported by Royal London out last year entitled ‘The value of financial advice’.
This seems a bit counter intuitive. It’s easy to assume that as individuals accumulate (or come into) wealth, they might be more inclined to seek some help about how to manage it. What the report highlights is that it takes a person who’s fairly savvy about financial matters to recognise that they might need some help. This is regardless of how much wealth they actually possess.
£40,000 better off
With so much ‘self-help’ about managing finances on the internet these days, many wealthy individuals may think they are savvy and they are quite happy to manage their own affairs.
What the report shows, however, is that those who engage with a financial adviser increase their wealth significantly more than those who decide to go it alone. The headline take-out is that people who receive financial advice are an average of £40,000 better off than those that don’t.
The report’s data shows:
- those who took advice were likely to save more as well as to invest in the equity market.
- they ended up with more financial assets and pension wealth than similar individuals who did not take advice.
Of course, financial advisers are ideally placed to help people who don’t have much clue about the best way to manage their money but the report does seem to suggest that a better target audience for new business is those who believe they do have a good level of understanding.
The findings of this report are extremely good news for the advice industry and it’s a shame it hasn’t had more publicity in the mainstream media – a quick search on the internet showed it was mainly trade titles that covered the story.
Certainly, for any advisers looking to increase business, it seems targeting people who already think they are money savvy could prove a rewarding strategy, especially once those people realise that really savvy people are using advisers to give them the best chance to improve their wealth.