People who took advice around the turn of the century were on average over £47,000 better off a decade later than those who did not, research by the International Longevity Centre (ILC) has found.
The ‘What it’s worth: Revisiting the value of financial advice’ report commissioned by Royal London tracked the wealth of thousands of people since 2004 to 2006.
The wealth uplift from advice comprises of an extra £31,000 of pension wealth and over £16,000 extra in non-pension financial wealth.
Steve Webb, director of policy at Royal London, said: “Many of those who receive financial advice can testify to its value, but it has always been difficult to quantify.
“This research uses the latest statistical methods to identify a pure ‘advice effect’ and it is strikingly large.
“If financial advice can add £40,000 to your wealth over a decade compared with not taking advice, it is incumbent on government, regulators, providers and the advice profession to work together to make sure that more people are sharing in this uplift.”
David Sinclair, director of International Longevity Centre, added: “The simple fact is that those who take advice are likely to be richer in retirement.
“But it is still the case that far too many people who take out investments and pensions do not use financial advice.
“And only a minority of the population has seen a financial adviser.
“We must now work together to get more people through the ‘front door’ of advice.”
The report claimed that industry and policymakers should work together to ensure advisers can communicate clearly about the costs and benefits of advice and to make sure those who don’t receive professional advice can still achieve good outcomes.
The report also recommends collaboration for harnessing technology as a route to deliver quality advice at a lower cost.
Tom Dunbar, distribution director at Royal London Intermediary, added: “These findings build on those of the previous research and clearly show the impact financial advice is having on people’s overall wealth.
“This effect is shown across the earnings range from mass affluent to high net worth and shows the great work being done by advisers across the UK.
“As an industry we need to do much more to promote the benefits of good quality ongoing advice.”