Financial advice can boost clients’ emotional wellbeing, making them feel better about themselves and their finances, according to new research from Royal London.
It also suggested that advised clients who have an ongoing relationship with their adviser are almost twice as likely to feel in control of their finances than those who didn’t.
The findings from Royal London showed more than three fifths (63%) of people who had received financial advice felt financially secure and stable, compared to just half (48%) who had not received advice.
Four in 10 (41%) who had not received advice said they felt anxious about household finances compared to just a third (32%) of those who were advised.
Lower income households who received advice also felt more in control of their finances (65%) compared to those that hadn’t received advice (52%).
Meanwhile, Royal London said recent events had impacted people’s confidence, with a third of respondents (35%) feeling anxious about their financial situation as a result of Covid-19, and 65% appreciating the value in being more prepared for life’s shocks.
Tom Dunbar, intermediary distribution director, 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.”
The research found that advised clients feel positive about the service they received, with 82% showing satisfaction with the quality of advice and expertise, while 81% expressed satisfaction with advisers’ communication style and trustworthiness.
In addition, advice was shown to boost people’s knowledge and understanding of their finances, with advised clients feeling up to three times more confident in their understanding of products and financial matters compared with those who didn’t receive advice.
Liz Field, chief executive of trade association PIMFA, 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.”