Financial advice helps to improve the emotional wellbeing of customers by making them feel more confident and financially resilient when compared to those who have not received advice, according to new research from Royal London.
Around 17 million people in the UK have received financial advice with the vast majority feeling positive about their adviser and the services they provide. For advised customers, the most commonly recognised emotional benefits of their adviser’s services are having access to expertise, which makes them feel more confident in their financial plans, feeling more in control of their finances and gaining peace of mind.
Liz Field, chief executive of PIMFA, the trade association that represents financial advisers and wealth managers, commented: “At PIMFA we have long believed in the value of financial advice. This important research from Royal London, once again demonstrates just how much difference that advice can make.
“However, many people believe that financial advice is out of their reach, or that it won’t make a material difference to their lives while also finding financial matters daunting or a cause of anxiety. There is a proven direct correlation between a person’s financial and mental wellbeing.
“At a time when many people will be worried about their financial future, as the economic impact of Covid-19 starts to be felt, getting professional financial advice is vital and we welcome research such as this that so effectively illustrates how advice can affect real help for people in their everyday lives.”
The research also shows that advised customers feel positive about the service they received – with the key areas of satisfaction being the quality of advice and expertise (82%), communication style (81%) and trustworthiness (81%).
Customer satisfaction with advisers is even higher where there is an ongoing relationship in place. Similarly, the key emotional benefits are felt even more strongly when the customer feels they have a closer relationship with their adviser.
Jessica Woodcock, private wealth adviser at AHR Private Wealth says: “Our emotional wellbeing is something which affects all aspects of our daily lives and most people will have constant worries to think about that can lead to anxiety and stress. Financial matters are often a central source of concern for individuals, whether they are worried about not saving enough money, fear that they cannot provide the best future for our family, or are stressed because they don’t know where to begin or what their options are.
“It is these worries that can also form the primary motivators for consumers to seek out advice and in return, our advice can satisfy these concerns and help consumers to achieve their financial objectives. Having a professional to be able to break down their financial situation and provide them with the knowledge required to make good decisions can help them to achieve feelings of security, freedom and fulfilment that they seek.
“In unusual times like these, the role of financial advice in improving wellbeing is even more apparent. Financial uncertainty is weighing on the minds of many consumers and our advice that can give clients the peace of mind that the decisions they are making are the right ones and that they are well prepared against a potential further crisis. By building strong, long-term relationships based on trust, advisers can give clients the confidence that they are in safe hands, receiving expert advice from an experienced professional that cares about them and their family.”
Impact of Covid-19
The research also looked at how the Covid-19 crisis made non-advised customers feel about their finances. A third (35%) of people felt anxious about their financial situation and 65% have come to appreciate the value in being more prepared for life’s shocks.
Tom Dunbar, intermediary distribution director at Royal London, said: “We have long suspected that the benefits of advice go far beyond financial gains alone and our research confirms that individuals who have received advice are more likely to feel confident about the future, and less likely to feel anxious or worried.
“It’s easy to see why clients turned to financial advisers when the pandemic struck. But advice is most powerful – and most rewarding – when it goes beyond a one-off meeting. An ongoing relationship with an adviser amplifies the emotional, as well as the financial, benefits.
“Covid-19 will have lasting effects on the nation’s finances for years to come. Now more than ever, households need the reassurance, expertise and confidence that professional advisers can provide to help them weather a difficult financial climate. The industry also has a responsibility to make sure more people are able to get the support they need.”