The Value of Financial Planning: Questioning the Disparity in Perception

July 03, 2023

Introduction: Many homeowners willingly pay estate agents thousands of pounds to secure a good price when selling a house. However, there is a reluctance to invest in the services of a Chartered Financial Planner for comprehensive financial planning, even when the potential rewards can be far greater and longer lasting. In this blog post, we aim to explore this discrepancy and shed light on the value of financial advice. Recent research indicates that financial advice can significantly impact individuals’ wealth and provide substantial benefits, particularly for those with lower incomes.

The Study: A report by the International Longevity Centre (ILC), in collaboration with Royal London, analysed the financial outcomes of individuals who sought professional financial advice between 2001 and 2006. The study compared the assets of those who received advice with those who did not take advice over ten years. The findings revealed that individuals seeking advice experienced an average increase in assets of nearly £48,000 after a decade.

Benefits for the Less Well-Off: One striking finding from the ILC report is that the benefits of financial advice were not limited to wealthier individuals. In fact, those classified as ‘just getting by’ experienced even greater financial improvement, despite starting from a lower baseline. This demonstrates that financial advice offers significant value to individuals across different income levels.

The Rewards vs Costs: Considering the rewards of financial advice, the study estimated that the combined benefits over the ten years were approximately 2,400% greater than the initial cost of the advice. This statistic highlights the tremendous potential for long-term wealth growth through professional financial planning. It begs the question: if people are willing to invest in estate agents to secure a good house price, why are they more reluctant to pay for financial planning services that can lead to even greater rewards?

Looking Beyond Immediate Gains: Selling a house may result in a one-time financial gain, but comprehensive financial planning has the potential to generate lasting benefits. A well-designed financial plan can help individuals achieve their long-term goals, whether retirement planning, wealth accumulation, or funding a child’s education. Individuals gain access to expertise, personalised advice, and tailored strategies to maximise their financial potential by engaging with a Chartered Financial Planner.

Conclusion: While it is essential to recognise the valuable role of estate agents in property transactions, it is equally important to question why financial planning is not always held in the same regard. The evidence is clear: professional financial advice can significantly improve individuals’ financial well-being, irrespective of their income level. As the findings of the ILC report suggest, financial advice can leave non-affluent savers around £50,000 richer over ten years. The rewards of financial planning are not limited to immediate gains but can have a lasting impact on one’s financial future.

So, the next time you consider investing in the services of an estate agent, take a moment to reflect on the potential benefits of financial planning. Engaging with a Chartered Financial Planner can unlock the opportunity for long-term wealth growth and financial security. Don’t underestimate the value of comprehensive financial advice—it may be the key to achieving your financial goals.