Are Royal London and the ILC-UK right about the Value of Advice?


Karen Wagg, P&FS team

Think Tank ILC-UK and Royal London have determined that the “value” of advice is £41,099. But is that the value that matters?

Are Royal London and the ILC-UK right about the Value of Advice?

I don’t use Amazon because it saves me money, although sometimes it does. I use Amazon because it’s easy to do so. Indeed, thanks to the app on my mobile, I don’t even have to type in the web address anymore, or sign in.

Amazon once traded on the basis that you were likely to find better deals on books and films and music there than in the stores; but these days it is all about convenience. Using Amazon is easy and they keep finding ways to make it easier still. In effect, they want to be the service that we can’t cope without.

Which is a rather long-winded introduction to the question of value.

Royal London and ILC-UK tackled the ever-tricky question of the “value of advice” this week, with a report suggesting that the value of financial advice is £41,099. Its authors examined the impact of financial advice offered in 2001 and 2007 on outcomes for consumers in 2012 to 2014, which found that less-wealthy clients accumulated, on average, £14,036 in liquid assets and £25,859 in pensions wealth more than those who didn’t have advice.

So, if you want to be better off by a total of £41,099, use an adviser (NB: we are aware that if you add up the two figures above you get £39,895 but we are quoting the reported figures).

But is that the value that advisers want to focus on?

After all, is that all that financial advisers are offering - a somewhat better result from your savings than you would have had had you done it yourself? I think there is rather more to it than that…

For any service that you are selling there is a need to convince the customer of its value. But in the financial advice space that value encompasses a great deal, much of which is personal.

It is about navigating tricky times; it is about trust and learning what options are available to you; about meeting your personal financial goals; about finding ways to manage and protect your families, as well as your own financial future. It is about accessing the best deals, filtering information to bring what is relevant to the fore and avoiding decision paralysis when faced with a staggering number of options. It is about understanding how best to use the tax credits on offer and make your savings work as hard as possible. It can be about community and networking and business.

In short – if financial advice is offered in the right way then, no matter how it is offered, it is personal and that is where its true value lies.

Of course, you don’t expect to hire a financial adviser and then find out that you are losing rather than growing your savings; and for financial advisers facing the tricky stumbling block of trust, perhaps Royal London and ILC-UK’s valuation is a useful first step.

But when it comes to communicating value it is necessary to understand, not only the value that you offer your clients, but also what it is about your service that provides value to them. If you can understand your audience then your communications will be much more effective.