We have often looked at this topic. Why use a financial adviser, what can they do for you, how much money can they make you, All good questions.
Let’s try to take them in turn.
We can break this down into two parts. Firstly, the financial benefits and secondly the benefits of what advisers do for you (which often lead to the financial benefits anyway).
Take the recent pandemic as a good example. What have advisers done for their clients? Most advisers have done what seem like quite simple things, but ones that have a dramatic effect. Like maintaining confidence in the market and keeping clients invested. This has been so important recently as those panicking and cashing out early could have lost as much as 30%.
Research from Aegon showed that if a 25 year took a three-year pension break for example, that would cost them £15,000 by retirement age. (Based on paying 6% contributions). So, staying invested is vital.
Other recent research from Schroders found that 43% of people aged between 51 and 70 are “anxious” about their retirement income. Those with an adviser don’t feel these anxieties.
What can they do for you?
On the benefits side, one of the key roles’ advisers play is to get people to save in the first place, then to invest those savings and finally to manage the risk of their investments. Too many people’s savings are in cash. Almost 40% according to FCA research. This is costing people money.
£10,000 invested in cash between 2008 and 2018 would be worth £11,720. If that £10,000 had been invested it would have been worth £21,905. That’s £10,185 more a massive 85%. (According to research figures from Schroders 10/3/21).
That has got to be a good reason to use an adviser hasn’t it?
Technology boosts advice
We’ve looked at the effects of lockdown on adviser technology already over the last 12 months, but now there’s research to back up what we already thought. Technology provider Intelliflo have conducted a survey of over 200 advice firms this month (March 21) and found that just about half of all firm have reported an increase in the number of clients over the pandemic period. One of the main reasons seems to be the use of technology to hold meetings (Zoom, Teams etc) which has meant that firms can reach out to prospective clients further away.
Most adviser expect this development to continue.
At the same time Intelliflo reports that the number of new users of their online Personal Finance Portal had increase by 85% over the last 12 months. The Portal (which we offer to all our clients) allows the secure transmission of information including documents between clients and advisers. We have certainly seen an increase in the use of the Portal, but probably not to the same extent. Perhaps a number of advice firms have just started to catch up with technology during the pandemic?
The use of DocuSign increased by over 100% over the same period. This is a system allowing for electronic rather than wet ink signatures on client documents. One of the reasons for the growth in the use of this service has been the increased acceptance of online signatures by providers themselves.
The survey also found that over 70% of advisers thought that their clients’ finances had improved over the last 12 months, which is really good news for customers.