Giving a ‘Shout Out’ to The Value of Financial Advice

Tue Jul 13 2021

Overview of the 2021 Value of Advice Research

When dealing with regulators and policy makers, one can sometimes feel that the true value of Financial Brokers is misunderstood and not appreciated. However, how consumers experience the work of Financial Brokers and the impact that work has on helping them build wealth and financial security into the future is what really matters to their lives. To that end in May 2021, Brokers Ireland commissioned iReach to conduct consumer research in relation to the value of advice. The research was nationally representative by age, gender, region, and socioeconomic status. It provides insights into savings/ investments, pensions, financial security, and the role of financial advisors.

Respondents Demographics

Of the respondents, 49% were male, 51% female and 57% were aged between 25 and 54. There was a good geographical spread with 29% from Munster, 22% from Leinster, 10% from Connacht and 7% from Ulster. One in three respondents had a household income between €40-€80k, with 15% stating their household income was over €80k. Forty percent of those surveyed had children at home while 60% had no children at home. Almost 69% had third level educational qualifications.

Using a Financial Advisor

From those surveyed, 37% had used a financial advisor in the past and 33% consult a Financial Advisor at least once a year. A Financial Broker is now the most trusted source for financial advice, with 33% of those who had used a financial advisor trusting a Financial Broker the most. This is a significant increase of 13% from 2016 and illustrates how much traction the Financial Broker brand has gained in the last five years. More than half (55%) of respondents felt more in control of their finances having used a financial advisor and 88%, rated “explaining charges and product features in simple English” as the most important consideration when engaging with a financial advisor.

Financial Security

Twenty-seven percent of respondents rated their feeling of financial security at between an 8 and a 10, the top rating. Of those 31% had used a financial advisor, compared to 24% who had not. Thirty-four percent of respondents felt confident or very confident about being financially secure in retirement. Of these 37% had used a financial advisor and 32% had not. Protection Products Those who had used a financial advisor have higher rates of ownership of Life assurance, Mortgage protection, Critical Illness cover and Income protection, whereas 63% of those without a financial advisor had none of these policies in place. Life assurance was the most commonly owned policy of those surveyed, with 24% of those without a financial advisor and 55% of those who have used a financial advisor having the product. The average level of life assurance was €131,250 overall; €108,247 for those who did not have a financial advisor which increased by 34% to €145,645 for those who did use a financial advisor.

Pensions

Of those surveyed 49% had a pension, rising to almost 3 in 4 (73%) among those who had used a financial advisor. Of those without a financial advisor only 34% had a pension. The average pension pot was €110,759. Those who used a financial advisor had an average pension pot of €128,933, over double the amount of those without a financial advisor (€62,600). The average age at which respondents started saving into a pension plan was 30, 29 for those who had used a financial advisor and 31 for those who had not. In terms of the level of security consumers feel, 34% were confident or very confident about being financially secure in retirement, and of these 37% had used a financial advisor and 32% had not. Twenty-nine percent of those retired (with no financial advisor) said their biggest regret was not preparing more for retirement.  More than one in five (21%) of those surveyed used additional voluntary contributions (AVCs) or pension top ups when saving into their pensions. Over 1 in 3 (35%) who had used a financial advisor do so versus 12% of those who had not.

Saving and Investments

The average amount in total savings and investments (excluding pension and property) was €59,464. For those who had used a financial advisor, the average increased to €81,890, 53% more than those without a financial adviser whose average was €53,200. A good return on money is considered as important or very important for 96% of those who have used a financial advisor – compared with 83% of those who have not.

Conclusion

Consumers’ value advice, and they value Financial Brokers, as does the industry. Perhaps it is time that regulators and policy makers look at the real value the Financial Broker profession offers consumers and start breaking down the barriers and disproportionate impediments to doing business. Note: The iReach study involved 1,000 respondents with a confidence level of plus or minus 2.5pc. The fieldwork was undertaken from 6th to the 13th May, 202

The 2021 Value of Advice Report will be published and available to download from end of July 2021. 


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