Value of financial planning

Posted on Oct 28, 2016

So, whats the real value of financial planning?

A recent survey by Old Mutual Wealth revealed some startling statistics. Retirees who had a financial plan and saw an adviser regularly, receive a retirement income which is on average 41% higher than those who never visited an adviser.

We don’t want to brag but at Juno Wealth, but we’ve always known that we provide really good value when it comes to financial planning (financially and otherwise). And, with such a dramatic increase in income, we thought we’d investigate just how much of a difference seeing an independent financial adviser and life planner can make.

Here’s what we found

  1. The current average retirement income is £18,000. Your 41% more instantly takes it up to just over £25,000. And that’s really just at pension entry level.
  1. 68% of those surveyed by Old Mutual Wealth who had a target income and saw an adviser regularly, retired because they felt they could afford to. As opposed to only 26% who had never seen an adviser and felt they could afford to retire.
  1. A regularly advised pre-retiree expects to have saved an average of £170,000 in pensions (excluding defined contributions) by retirement. A non-advised pre-retiree expects to save a much smaller £100,000.
  1. Another report by found that over a third (34%) of those who have purchased or arranged a financial product themselves have gone on to regret their decision.

Tax saving

  1. Tax savings pursuant to professional advice can be significant. Take the example of grandparents with a large estate. They might consider putting some money in trust. An individual can give away up to £325,000 without incurring Inheritance Tax. The advantage in disposing of your assets in this way is that your estate is reduced in value by the amount you have settled in the trust (say £325,000), thereby reducing the tax liability on it and that could mean an immediate potential saving on tax of £130,000. And the money in trust? Well perhaps you want to help out with the grandchildren’s school fees. And that’s just one simple example.

Cost Savings

  1. As part of our investigation we examined the investment portfolio costs of new clients we took on and the costs associated with their existing investments. Over the preceding 12 months we identified that the we were able to achieve a circa 0.5% per annum cost saving in portfolio fees by applying our own investment philosophy. The compound effect of these costs savings will be significant over time and result in higher than expected returns for our clients, than if they had stuck with their previous strategy.

It’s not just about money

  1. 73% of people who took part in the Unbiased survey who had a financial plan in place were confident that their loved ones would be financially looked after if something should happen to them, compared to just 41% of people who don’t have a plan.
  1. The same report revealed how the earlier you take advice, the more prepared you are for retirement. So 71% of those who took advice in their early 20s felt well prepared for retirement as opposed to 39% who didn’t take advice until their mid-40s and 50s.
  1. Finally, and significantly 53% of those surveyed as part of the Old Mutual Wealth survey who had seen an adviser regularly or even sporadically, felt they benefited from peace of mind.

Financial Planning isn’t just about money but it can make a significant difference to the value of your assets and the amount of your retirement income. A difference that can amount to tens of thousands of pounds or more depending on your circumstances. And that’s before you add in to the equation peace of mind and time saving factors. When you add it all up, it makes a pretty compelling picture.

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