The value of financial advice: how much is it really?

Although professional financial advice comes at a cost, understanding the potential long-term benefits and value in terms of investment returns, tax savings, and protecting your financial future is essential to knowing if working with an advisor is a good investment.

We look at the truth quality of financial advice.

How much is financial advice?

Financial advice can make people, on average, around £48,000 better off in pensions and financial assets compared to those who don’t take advice, according to the International Longevity Center (ILC).

To a[–>report in 2017, the ILC found that Brits who took financial advice between 2001 and 2006 enjoyed an increase in their average wealth of around £48,000 after 10 years, compared to those who did not take advice.

The benefits of advice were most important for those with limited disposable income, and for people who received advice more than once.

The compounded benefits of financial advice over a 10-year period work out to be 2,400% greater than the initial cost of advice.

The study, produced by the ILC and Royal London, compares people who took financial advice with those who did not, by looking at their assets, such as pensions, savings and investments, over ten years.

The study also focused on people across two different levels of wealth: ‘[–>affluent‘, who feel well and are still living’ – whose income matches their outgoings.

Among the report’s many findings, perhaps the most interesting was the revelation that a group of people with lower incomes benefited from financial advice more than wealthier people.

Learn more: can I have more than one financial adviser?

Few people benefit greatly from advice

The ILC report showed that it wasn’t just the wealthy who benefited from financial advice over the decade.

Instead, it appeared that those described as ‘just surviving’ achieved great financial strength despite starting from a humble beginning.

Equal benefits across wealth levels

Following financial advice, the average saver in the ‘more than’ category only had their pension boosted over the past decade by 24% (£35,054), compared to savers in the same category who received no advice.

In the ‘rich’ group, this difference was modest but still striking. Wealthy people who took advice had £24,266 more after 10 years than their non-advised counterparts, an 11% increase.

The report also measures the impact of non-pension assets such as savings and investments.

Again, the gains for those who ‘passed through’ were proportionately greater: a 35% increase in non-pension wealth compared to non-advisers.

The ‘wealthy’ advice group enjoyed a 24% increase in non-pension wealth, compared to those who did not receive advice.

Overall, the ‘just passed’ group who took advice ended up being £50,332 richer than those who didn’t, while the ‘wealthy’ advice group beat the non-advised group by £43,353 overall.

This means that the total amount of financial advice benefits over the 10-year period was £47,706, with the majority of that being the growth of the pension pot.

Ongoing or follow-up advice adds extra value

While the report confirmed a significant increase in wealth from one-time advice, it also revealed significant benefits from additional or ongoing advice.

It compared those who received counseling only once (at the beginning of the decade) with those who received counseling two years before the end of the decade.

Those who had taken additional counseling were found, on average, to be 61% better overall.

However, this number must be treated with caution, as the report does not account for the initial wealth levels of these two groups.

It is possible that those with more assets were more inclined to seek ongoing advice.

Although this study does not show how much additional advice has been taken over the decade, these findings make it more likely that there may be a limited capacity to take additional advice.

How does the value of financial advice compare to the cost?

Most of the savers in the survey took their financial advice from an independent person[–>financial adviser (IFA).

If people in the same situation were to seek such advice now, what would they lose?

Estimating the cost of financial advice

It is possible to guess[–>cost of independent financial advice usage[–>Unbiased’s cost of advice tool.

Considering the same situation as the ILC report, we will assume that the average person in the ‘more than’ category has a pension pot of around £140,000 and possibly more in savings, at the time of receiving the advice.

Meanwhile, the average ‘rich’ has a pension pot of around £230,000 and perhaps £50,000 or more in other liquid assets.

On this basis, savers can expect to pay between £1,700 and £2,500 for[–>one-off independent advice with their financial situation. As a rule of thumb, the more assets you have, the higher the fee will be.

The[–>adviser’s fee it can include the selection of the best products for your conditions and goals, as well as all the necessary operations.

Assuming a one-off advice fee of £2,000 and an average return of £47,706 over 10 years, according to the ILC report, the financial advice would deliver a value of around 24 times the initial cost – or £4,570 net per year.

Why do financial advisers in London charge more?

Financial advisers in London often charge higher fees because their operating costs, such as office space, staff and professional services, are much higher than elsewhere in the UK.

This growing trend is often reflected in their price.

Moreover,[–>London based financial advisers it can deal with difficult financial cases due to the city’s large number of high-end customers, which can contribute to high rates.

Long-term value of financial advice

The ILC study lasts only ten years and measures the quality of financial advice over that period.

In fact, the advice period is longer than this as savers build pension pots during their careers, which can be 40 years or more.

Find out if you’re saving enough for retirement with us[–>pension calculator below.

Towards the end of their careers, these savers will want to save their money for retirement, which could be another 20 to 30 years.

Because of[–>the nature of compound interest and investment growththe benefits of the advice should accrue over time, resulting in a greater difference in income than those who did not listen to the advice.

What’s more, the ILC report only looks at the ‘savings’ stage of financial planning – not what advisers call the ‘decumulation’ stage where people use their pension pots.

It is very important to seek advice about[–>how to take an income from your pensionsince you are planning for the next twenty or thirty years, and mistakes made in the beginning are not easily corrected.

Retirement and the ten years leading up to it are some of the most important times to seek financial advice.

Find out more about[–>many ways in which financial advice can help you.

The emotional value of financial advice

Managing one’s finances can be stressful and time-consuming given the complexity and importance of financial decisions.

The latest from Vanguard[–>2025 study provides the following information on how financial advice can add value and save time:

• Advised clients are less financially stressed than individual investors: Advised investors are half as likely (14%) as independent investors (27%) to experience high financial stress.

• Counseling provides emotional value to clients with added peace of mind: 86% of advised clients report greater peace of mind when managing their finances, compared to managing them alone. Counseling improves positive feelings about investing and appears to be effective in reducing negative feelings about personal finances, such as stress and anxiety.

• Advice saves customers time: 76% of advised clients say advice saves them time, that is, two hours a week (or more than 100 hours a year), thinking about and dealing with their finances.

Seek professional financial advice

ILC research shows that investing with sound financial advice can prove more valuable in the long run.

Even a small payment can lead to a larger profit over time, especially for those with a limited amount of money.

To get[–>expert financial advice it’s a smart way to grow and protect your money for the future.