Financial advice makes customers feel more financially resilient than those who have not received advice
Research from Royal London has suggested that financial advice improves emotional wellbeing of customers by making them feel better about themselves and their finances, especially in times of crisis.
Around three in five (63%) who received advice said they felt financially secure and stable compared to just half (48%) who had not received advice. Four in 10 (41%) who had not received advice felt anxious about household finances compared to just a third (32%) of those who were advised.
Lower income households who were advised also felt more in control of their finances (65%) compared to those that hadn't received advice (52%). Similarly, only two in five (39%) lower income advised households worried about being able to cope financially when they retire in comparison to nearly half (47%) of households who aren't advised.
The study of 4007 also found that those who were advised about protection felt the emotional benefits of advice more so than those who were advised generally, with one five (20%) with protection in place feeling less worried about what will happen their family should they die compared to one in seven (15%) who were advised generally.
The research also showsed 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%).
Knowlege is power
Understanding of financial products was much greater amongst those who were advised compared to the non-advised. A quarter of non-advised individuals said they would not know where to start when asked about life insurance (23%) or protecting against serious illness (24%). In comparison, just 7% of those who are advised gave this response when asked about life insurance and 8% would not know where to start when asked about protecting against serious illness.
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."
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."
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