Professional advice helps customers to improve their emotional wellbeing by making them feel better about themselves and their finances – especially in times of crisis, 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.
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.
The report found that customers who have been advised and have protection products felt the emotional benefits of advice more than those who were advised generally. Having protection cover in place made people feel more prepared for life shocks. One in five (20%) people who had protection felt less worried about what will happen to their family after they die compared to one in seven (15%) who were advised generally.
People who receive financial advice feel more confident about the future, and more financially resilient. 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.
Royal London saids that 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 39% of lower income advised households worried about being able to cope financially when they retire in comparison to 47% of households who aren’t advised.
Advisers also helped people to boost their knowledge and gain a better understanding of their finances – particularly when it comes to protection, and retirement planning. Advised customers feel up to three times more confident in their understanding of products and financial matters, compared with people who don’t have an adviser.
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, added: “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.”