Financial planning leading to better outcomes beyond wealth
A global survey has examined the impact of advice across quality of life, financial confidence, financial satisfaction and experienced value, busting long-standing misconceptions of the profession.
Launched on World Financial Planning Day, the Financial Planning Standards Board (FPSB) Value of Financial Planning Research 2023, conducted in collaboration with research consultancy MYMAVINS, surveyed over 15,300 advised and unadvised consumers aged 25 and over, and earning over $95,000 per annum or holding over US$55,000 in investable assets or equivalent across 15 territories.
It reported clients who work with a financial planner say they are better off, with over half highly satisfied with their wealth versus a quarter of unadvised consumers.
Additionally, unadvised consumers recognise improved financial wellbeing and peace of mind (37 per cent), and greater wealth growth (36 per cent) as key benefits to seeking financial planning.
Dante De Gori, chief executive of the FPSB and former chief executive of the Financial Planning Association of Australia, said: “In this current volatile climate, where unexpected events can send shockwaves through the global economy, the role of financial planning in general and of CFP professionals in particular has become even more critical in empowering consumers to make informed financial decisions and achieve their long-term goals, while enjoying a better quality of life.”
The global survey also addressed a number of myths surrounding advice, including affordability and trust.
It found financial planning benefits for more than just the wealthy, with 44 per cent of advised consumers with an income of $95,000 and less reporting improved family life, improved social life (26 per cent), improved mental health (46 per cent) and increased work satisfaction (29 per cent).
Similarly, some 50 per cent of advised consumers with an income between $95,000 and $125,000 report improved family life, improved social life (40 per cent), improved mental health (50 per cent) and increased work satisfaction (38 per cent).
Looking at mental health, over 70 per cent of advised clients feel they can cope well with any health issues compared to 64 per cent of unadvised consumers.
Nine in 10 millennials who work with a financial planner agree financial planning has left them better off financially, according to the research.
Additionally, some 80 per cent of advised clients say the benefits of financial planning outweigh the costs.
In terms of trust, the majority (90 per cent) of advised clients report they trust their financial planner to act in the client’s best interests.
David Sharpe, chair of the Financial Advice Association Australia (FAAA), noted advice professionals and their clients have always known that these long-standing myths are false, despite being regarded as public truths.
“But with these research findings, the high value that financial advice can bring is undeniable. Not only do clients who work with a financial planner feel they are better off, they also feel more at peace with their finances, which is especially important as family budgets are strained by the rising cost of living,” Sharpe said.
“As we celebrate World Financial Planning Day, it is important that all Australians understand the benefits that financial advice can bring into their own lives.”
He highlighted the FAAA Value of Advice Index, aimed at showing the difference between those who do work with a financial planning professional (advised) and those who do not (unadvised). It is measured across components including quality of life, financial confidence and financial satisfaction.
“Across those three components, the index showed that financial planning clients experience a higher quality of life, greater financial confidence, and more financial satisfaction than those who are unadvised,” he added.
AUTHOR
Rhea Nath
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