Forget the price, work out the value financial advice provides

There has been plenty of coverage in the mainstream press in recent weeks about adviser fees.

Press scrutiny of fees and rewards for St James’s Place advisers and even questions over why fund manager Neil Woodford was still allowed to charge to manage his soon-to-be closed Equity Income Fund, have shone the spotlight on how much consumers pay to have their money managed.

Financial advisers are different to fund managers like Woodford as rather than directly managing your money, we are putting together a financial plan and making sure it is in appropriate tax wrappers and performing according to your goals.

There are various fee structures in the advisory sector, from hourly rates to flat fees or a percentage of assets.
Whether some companies charge too much is a separate debate, but surely having someone help formulate and track a financial plan is worth paying for?

It can be hard to put a value on someone who can hold your hand through volatile markets or if you are looking for the best mortgage to buy your first home or life cover to ensure your family is protected.
New research by Royal London and the International Longevity Centre has attempted to put a price on this support.

They claim clients could be £47,000 better off a decade later than those who did not take advice.

This result comes from detailed analysis of the government’s Wealth and Assets Survey – which asks respondents if they have received professional advice – and has tracked the wealth of thousands of people over two yearly ‘waves’ since 2004-06.

The wealth uplift from advice comprises an extra £31,000 of pension wealth and more than £16,000 extra in non-pension financial wealth.

Financial advice increases the probability of having savings by 4.1 percentage points and the probability of having risky assets by 7.5 percentage points.

This shows it is important to understand how much you are paying for advice but it is equally vital to comprehend how much value you can get from it too.

• HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen
• The value of an investment and any income from it can fall as well as rise and you may not get back the original amount invested
  Past performance is not a reliable indicator of future performance and should not be relied upon