Take financial advice if you want to be 39% better off in retirement

It is often hard to show in tangible terms exactly how effective financial advice can be. However, new research from Dunstan Thomas reveals that those taking financial advice can be 39% better off in retirement.

The value of advice

In a survey of 1,002 UK people aged 54-71 (known as the ‘baby boomer’ generation), Dunstan Thomas revealed a relatively high level of reluctance to take advice with:

  • 47% doing nothing, or planning to do nothing to gain knowledge about pensions before they retire
  • 25% relying on reading financial pages of national newspapers for financial guidance
  • 54% having no intention to visit an adviser for Inheritance Tax (IHT) related financial advice

However, those that did take financial advice, were almost two-fifths a year better off in retirement, with:

  • The average gross household income for those taking advice at £33,557.45
  • The average gross household income for those making retirement income decision alone at £20,373.40

Adrian Boulding, Director of Retirement Strategy at Dunstan Thomas, commented: “While it is inevitable those who go to an adviser for assistance have more savings to manage in the first place, it is worth noting financial advisers instil the financial disciplines of saving, planning and reviewing progress, which helps build long-term savings.”

Of those surveyed, one in five planned to seek regulated, face-to-face financial advice. The main reasons for doing so were the security of having a professional opinion, and not having to make important decisions alone.

The survey also found that over a third of people weren’t sure of the difference between professional, regulated advice, and general guidance. For example, 17% were planning to seek guidance from services such as:

  • The Money Advice Service
  • The Pensions Advisory Service
  • Pension Wise

Whilst this route to gaining financial knowledge is, of course, better than nothing, it is often only the starting point for a proper retirement plan. Regulated advice from a professional adviser will be able to help you apply that knowledge and ensure that any actions taken are right for your personal circumstances.

What other benefits are there to taking advice?

According to the International Longevity Centre, people who work with a financial adviser boost their assets by an average of £41,099. This has added a total of £2.5 billion to people’s savings and investments, and £112 billion in extra income from pensions.

Whilst the Dunstan Thomas survey focused on the baby boomer generation, taking advice at an earlier age can significantly increase your level of preparation for retirement (Source: Unbiased). For example:

  • 71% of 18-24 year-olds who took advice felt well prepared for retirement
  • 52% of 25-34 year-olds who took advice felt well prepared for retirement
  • 41% of 35-44 year-olds who took advice felt well prepared for retirement
  • 39% of 45-54 year-olds who took advice felt well prepared for retirement

As with anything in life, the sooner you act, the better. A high level of reluctance to taking advice exists among the 54-71 age group. Common objections to working with an adviser include:

  • The belief that financial advice is only for the mega wealthy
  • A DIY mentality and desire to go it alone
  • Fear of being scammed

These are all understandable reasons, but for the most part they aren’t accurate. Financial advice can often help your situation whether you have a very modest pension pot, or a large level of wealth. The DIY mentality is often hard to shake off, but it requires a lot of time, attention and experience to do properly. Some may wish to devote their retirement to swotting up on pensions and investment strategies, but most will probably want to go off and spend time doing something (or anything!) more exciting.

The latter point is valid, but is easily solved. Professional financial advisers are regulated by the Financial Conduct Authority (FCA), and will be present on the FCA register if authorised to give advice. You can check the register by clicking here. You can also stay vigilant against pension scams by checking the FCA Scam Smart list, available here.

For more information about how we can add value to your retirement planning, please get in touch using the phone number at the top of the page.