People who get financial advice are £40,000 richer

People who get financial help could be wealthier by around £40,000 than those who do not, a study found.

Those who received financial help between 2001 and 2007 had gained significantly more in financial assets and pension income than their similar uninformed peers by 2012 to 2014, according to a statement by think tank the International Longevity Centre-UK (ILC-UK), backed by Royal London.

Even those with reasonably average means can see a significant advantage from financial advice, said the report, which examined data from the Wealth and Assets Survey.

The paper reviewed the result of financial aid on two groups, the “affluent” and the “just getting by”.

The wealthy group comprised more affluent people who were more likely to have credentials, be part of a couple, and be homeowners. The “just getting by” the group were less rich, more liable to have lower levels of educational accomplishment, be single, divorced or widowed, and leasing.

The affluent-advised group had saved £43,245 more in pensions and assets on average than their equivalent peers who had not received advice.

The “just getting by”-advised team gained a similar amount more than their equivalent peers who did not get financial advice, at £39,895 on average.

The article suggests that to raise interest for financial advice; there should be responsibility on employers to assure staff automatically entered into a workplace pension can obtain the best data and guidance on their pensions.

The statement additionally said that regulators should continue to place importance on receiving independent advice.

Another statement from the Financial Conduct Authority (FCA) on Wednesday stated that a decrease of consumer trust in pensions could often time end in consumers paying excessively tax, missing out on investment growth or missing out on other gains.

Ben Franklin, head of economics of ageing at ILC-UK, said: “The advice market is not working for everyone. A high proportion of people who take out investments and pensions do not use financial advice, while only a minority of the population has seen a financial adviser.

“Since advice has clear benefits for customers, it is a shame that more people do not use it. The clear challenge facing the industry, regulator and Government is, therefore, to get more people through the ‘front door’ in the first place.”

Sir Steve Webb, a former pensions minister who is now director of policy at Royal London, said: “Financial advice need not be the preserve of the better off but can make a real difference to the quality of life in the retirement of people on lower incomes as well.

“The evidence shows that when people take the advice, they are overwhelmingly satisfied and benefit as a result. More needs, therefore, to be done to overcome the barriers to advise.”