People who receive financial advice could end up around £40,000 better off

Those who received financial advice between 2001 and 2007 had accumulated significantly more in financial assets and pension wealth than their unadvised equivalent peers by 2012 to 2014, according to a report by think tank the International Longevity Centre-UK (ILC-UK), supported by Royal London.

Even those with fairly modest means can see a big benefit from financial advice, said the report, which analysed data from the Wealth and Assets Survey.

The report examined the impact of financial advice on two groups, the “affluent” and the “just getting by”.

The affluent group comprised wealthier people who were more likely to have degrees, be part of a couple, and be home owners. 

The just getting by group were less wealthy, more likely to have lower levels of education attainment, be single, divorced or widowed, and renting.

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

The just getting by advised group achieved a similar amount more than their peers who had not had advice, at £39,895 on average.

The report recommends that to raise demand for financial advice, there should be a duty on employers to ensure staff automatically enrolled into a workplace pension can access the best information and advice on their pensions.

Regulators should continue to place emphasis on access to independent financial advice, the report said.

A separate report from the Financial Conduct Authority (FCA) on Wednesday said that a lack of consumer trust in pensions can sometimes result in consumers paying too much tax, missing out on investment growth or losing out on other benefits.

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 retirement of people on lower incomes as well.

“The evidence shows that when people take advice they are overwhelmingly satisfied and benefit as a result. 

“More needs therefore to be done to overcome the barriers to advice.“

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.“