Your clients are probably used to paying for your professional services. Whether you’re advising them on their personal or business arrangements, they will be accustomed to receiving an invoice for your time and expertise.
However, a new survey has revealed that people don’t seem to feel the same about financial advice.
Research published in New Model Adviser suggests that fewer than 1 in 8 people are prepared to pay for expert financial advice. This is despite an overwhelming majority of people who do work with a planner saying that they find it helpful.
Read on to find out more, why the introductions you make to us are so powerful, and just how financial planning can add value to your clients.
Just 12% of people are prepared to pay for financial advice
New research from OpenMoney has revealed that fewer consumers are seeking out financial advice in 2021 than in the last two years.
The study of more than 2,000 British adults found that 1 in 14 people (7%) has paid for advice in the last two years, compared to 1 in 10 in last year’s research.
The research also revealed that, of those who did pay for advice, more than 90% said they found it helpful.
The survey also found that, of those who have not paid for advice in the last two years, only 12% said they plan to do so in future. This rises to one-fifth (21%) among 18- to 24-year-olds.
The discrepancy between the number of people prepared to pay for advice and the proportion who find it helpful seems to suggest that individuals simply don’t know or understand the value of financial planning.
2 ways that financial planning benefits your clients
The OpenMoney survey asked respondents to identify what would make them pay for financial advice.
Source: New Model Adviser
Thankfully, there are two key ways that we can overcome these main objections, and demonstrate the value of financial planning.
Multiple studies have shown that financial planning can increase a client’s wealth.
For example, a study by VouchedFor found that advised investors generate 27% higher returns over 12 months compared to those that choose to take a DIY approach.
Over the longer term, a study by the International Longevity Centre found that receiving professional financial advice between 2001 and 2006 resulted in a total boost to wealth (in pensions and financial assets) of £47,706 in 2014/16.
David Sinclair, director at the Intentional Longevity Centre, says: “The simple fact is that those who take advice are likely to be richer in retirement.”
Simply, working with a financial planner can improve a client’s financial outcomes. Indeed, the OpenMoney research acknowledged that more than 90% of people who took financial advice found it helpful.
As well as improving a client’s wealth, working with a financial planner offers many emotional benefits. Indeed, a landmark Royal London study found that taking financial advice had a range of positive effects on an individual’s mental wellbeing.
The study found that people who work with a financial planner are more confident about the future, more stable and secure, and more likely to feel in control of their finances.
Source: Royal London
One of the other barriers to someone seeking financial advice was that they felt they “would need to be sure they could trust the advice”.
This is where it’s important for clients to seek out a Chartered firm. Sometimes called the “gold standard” of financial planning, only around 900 UK firms have Chartered status.
This demonstrates a high level of both service and expertise. If a client is concerned about trusting the advice they receive, choosing a Chartered firm such as Sovereign can give them real confidence that they will benefit from an honest and high-quality experience.
Find out more about our Chartered status and what it means for your clients.
Your recommendations are important to us
Finally, the OpenMoney research found that many people simply weren’t sure how to find the right financial planner for them.
A quarter of people (25%) who paid for financial advice found their adviser through their own research, while 43% had their adviser recommended to them.
Many of our clients come to us having been referred by friends, colleagues, family or by professionals such as you. Overall, in the UK, 1 in 10 people who work with a financial planner were recommended to them by another organisation or professional.
Ensuring your clients get the right advice when they need it can add real value. The OpenMoney research revealed that one-third of people:
- Find managing money and making financial decisions challenging
- Disagree with the statement: “I don’t need any help with managing my money and making financial decisions.”
They also found that a worryingly small number of people were being offered advice at key points in their life. Just 5% were offered financial advice on divorce, 4% after a bereavement, and 5% at retirement.
These are three of the times when advice is most important, so we appreciate hearing from your clients who need professional advice at these challenging times.
Get in touch
If you have clients who would benefit from financial planning, but who are unsure, our guide to the value of financial advice may help. This free, downloadable guide explores how financial planning adds value, and looks at the “costs versus benefits” of collaborating with a planner.
Please feel free to download and share it with your clients, if it would help.
In the meantime, if you have clients that would benefit from advice, or you’re interested in how you can work more closely with us, please get in touch. Email email@example.com or call 01454 416 653.