Why taking financial advice will pay its way for any investor

Nine out of 10 people who sought financial advice report feeling financially secure.

Looking far into the future is key for any financial adviser.

Money remains a significant source of stress for many Australians. The current economic climate of high inflation and higher interest rates has exacerbated insecurities.

The good news is that professional financial advice can offer a way forward. The 2024 Value of Advice Index, commissioned by the Financial Advice Association Australia, provides compelling evidence of the positive impact financial advice has on Australians’ lives, well beyond the realms of finance.

This year’s Index finds that the value of accessing advice has increased over the past 12 months, with significant improvements in the wellbeing of advised Australians – both financial and non-financial – across all measures.

The index compares responses from those who do not work with an adviser with those who do, and also with those who work with a certified financial planner professional, across four key metrics: quality of life, financial confidence, financial satisfaction, and their experience with their adviser. Importantly, over the past year, more Australians say financial advice has improved their situation in those four areas, while unadvised Australians, whose situation is largely unchanged, continue to lag in all areas.

The FAAA has developed the Value of Advice Index. This index measures the financial and non-financial benefits clients experience, with scores ranging from 0 to 100. The higher the score, the greater the perceived value.

The index highlights the “advice delta” – the difference in scores between those with and without an adviser. Across all components of the index advised individuals consistently scored higher than non-advised individuals.

The research – commissioned by the FAAA from the MYMAVINS group – is compelling evidence of the power of financial advice. A striking nine in 10 advised individuals report feeling financially secure.

The latest Value of Advice Index shows the value of accessing advice has increased over the past year.

Similarly, over 80 per cent express confidence in their ability to solve most challenges, highlighting the important role of financial advice in fostering broader resilience.

The study also dispels myths about advice. It’s not just for the wealthy or those nearing retirement. People across different income levels and age groups experience real benefits from working with a adviser. Nearly two in three are highly satisfied with their wealth, compared to only one in three unadvised consumers.

One of the critical roles of financial advisers is to help individuals address unmet needs. The research reveals that unadvised consumers often struggle with various challenges, including the ability to live their desired lifestyle, reducing financial worries and stress, and creating a realistic plan for a comfortable retirement.

The top three ways financial advisers have helped their clients, according to the study, are:

● Building a realistic plan for a comfortable retirement.

● Helping clients get the most out of their current financial situation.

● Reducing financial stress and worries.

These findings highlight the tangible value that financial advice can bring, empowering individuals to take control of their finances and build a more secure future.

The study also sheds light on the evolving needs and expectations of younger generations. Gen Y, in particular, views financial advice as a form of self-improvement and appreciates its holistic benefits.

Notably, close to three in 10 Gen Y receiving advice describe the relationship as providing self-improvement, compared to fewer than three in 20 baby boomers.

While cost barriers to seeking advice persist, the evidence is clear: the benefits of working with a financial adviser far outweigh the costs. The FAAA’s research serves as a powerful reminder that financial advice is an investment in one’s future, fostering not only financial security but also a greater sense of purpose, confidence, and overall wellbeing.

The 2024 Value of Advice research provides a road map for the future of financial advice in Australia, one where advisers play a crucial role in helping individuals navigate complexity, build resilience, and achieve lasting financial wellbeing and peace of mind.

David Sharpe is the chair of the Financial Advice Association of Australia.