The financial wellbeing research* from Aegon UK used an established methodology from the US Consumer Financial Protection Bureau adapted for the UK to measure financial wellbeing. This measure is based on a variety of factors, including respondents’ capacity to absorb a financial shock and their ability to make choices that allow them to enjoy life.
Financial wellbeing is the link between money and happiness. Understanding finances, particularly longer term savings and how finances can impact and transform lives, influences how people feel about their finances and the extent to which they feel in control of their money and can plan for the life they want.
Supporting its ‘Advice Makes Sense’ initiative, promoting the value and importance of advice, the report ‘Can financial advice impact financial wellbeing?’ looks at some of these key financial wellbeing indicators in relation to whether people have taken financial advice or not.
It finds:
• Those who have taken advice are more likely to enjoy life because of the way they are managing their money (34%) compared to those who haven’t (25%).
• Those who have had financial advice are more likely to agree that they are doing everything to secure their financial future (49%) compared to just 37% of those who haven’t.
• Nearly half (49%) of those who haven’t taken financial advice are concerned that the money they have now or will save won’t last. Just 37% of those who have taken financial advice share this concern.
• Those who have had financial advice are more likely to be able to financially handle a major unexpected expense (33%) compared to those who haven’t (23%)
• Those who haven’t taken financial advice are more distracted at work worrying about money than those who have taken financial advice.
• People with money worries who have had financial advice are less likely to struggle with tasks that are otherwise routine than those who haven’t taken financial advice.
Can financial advice impact financial wellbeing?
The report is an essential read to gain insight into the positive effects of financial advice on financial wellbeing.
It finds that those who have taken advice are more likely to enjoy life because of the way they are managing their money (34%) compared to those who haven’t (25%) and those who have had financial advice are more likely to be able to financially handle a major unexpected expense (33%) compared to those who haven’t (23%).
But it also looks at the long-term outlooks of people who have had financial advice versus those who haven’t.
The report finds that those who have had financial advice are more likely to agree that they are doing everything to secure their financial future (49%) compared to just 37% of those who haven’t.
While nearly half (49%) of those who haven’t taken financial advice are concerned that the money they have now or will save won’t last. Yet just 37% of those who have taken financial advice share this concern.
The report also touches on the impact that financial worry has on productivity in the workplace. It finds that employees who haven’t taken financial advice are more distracted at work worrying about money than those who have taken financial advice. While those with money worries who have had financial advice are less likely to struggle with tasks that are otherwise routine than those who haven’t taken financial advice.
Ronnie Taylor, Chief Distribution Officer at Aegon, comments: “We wanted to understand what impact receiving financial advice has on people’s levels of financial wellbeing. Our report shows a positive relationship between financial advice and financial wellbeing, recognising that advisers play a key role in supporting the financial wellbeing of their clients.
“It suggests that those who have engaged with a financial adviser about pensions, investments or protection are more likely to enjoy life because of the way they are managing their money, have money left over at the end of the month and are able to handle an unexpected expense.
“Financial wellbeing is the link between money and happiness but it’s not just about the amount of money someone has now, it’s about their plans for the future. The people who feel in control of their long-term financial plans and their relationship with money, will have a more positive outlook. So, for those wanting to focus less on money worries and more on enjoyment in life, financial advice could help give them the peace of mind to do so.
“This insight fosters a better understanding of financial wellbeing that will help advisers reach potential clients so more people benefit from financial advice.”
Chris Budd, Chairman of the Initiative for Financial Wellbeing comments: “Financial advice and financial planning in the UK is developing rapidly. It is no longer enough to just talk to clients about investments, pensions and tax. This research from Aegon is hugely important in providing the evidence for central premise of the Initiative for Financial Wellbeing (IFW), that talking to clients about their relationship to money – about their financial wellbeing – significantly enhances the impact of financial advice.
“Mark Till from Aegon shared some insights from this report with attendees at our conference recently.”
Aegon Report on financial advice and wellbeing
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