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Five ways that financial advice clients are better off
With the rising cost of providing financial advice, many planners are finding it more difficult to articulate the value of their fees to new and existing clients. However, evidence-backed insight suggests advisers should take confidence when approaching this conversation, as advised clients consistently state they are better off receiving advice than if they hadn’t.
The FAAA has conducted several surveys of how clients rate the value of the financial advice they receive, and Australian advised clients report five key areas where they say they are better off:
- Higher quality of life
- Confidence that they have a clear path to financial freedom
- Greater satisfaction with their wealth
- Greater sense of purpose
- Better retirement outcomes
Advised clients consistently report enjoying a better quality of life and more successful wealth generation strategies, with a greater ability to live their desired lifestyle while experiencing less financial stress compared to people who don’t. Many decisions we make in life, including financial decisions, are influenced by emotions and behavioural biases, leading to irrational choices. Importantly, financial advice helps individuals to stay disciplined, avoid impulsive financial decisions, and stick to their long-term financial plans.
That has been illustrated by several surveys conducted. Notably, the FAAA Value of Advice Index, backed by global research undertaken for the Financial Planning Standards Board (FPSB) by independent research firm MYMAVINS in 2023, has found that people who work with a financial planner say they are better off because they enjoy a higher quality of life, and they experience more financial confidence and less financial stress.
The survey found that five in 10 clients of financial planners said they were highly satisfied with their wealth versus three in 10 unadvised consumers. Importantly, eight in 10 clients of financial planners said the benefits of financial planning outweighed the costs.
The survey also found that seven in 10 people reported living with a strong sense of purpose, two in three said they are confident of solving most challenges while four in five felt financially secure. This presents a compelling comparison between the personal experiences of individuals who navigate their financial journey alone and those who work with a professional financial planner.
Other research conducted by the FAAA has found that advised pre-retirees envisage a brighter retirement future, and advised retirees actually experience a better retirement than those who are not advised. And when it comes to trust, nearly all clients of financial planners trust their planner to act in the best interests of their client.
The evidence is clear. Advised Australians overwhelmingly believe advice has made them tangibly financially better off and that its value outweighs the cost. The benefits are present regardless of wealth or age.
