"It is incumbent on government, regulators, providers and the advice profession to work together to make sure that more people are sharing in this uplift."
People who received financial advice between 2001 and 2006 were on average over £47,000 better off a decade later, according to research from Royal London and the International Longevity Centre.
The research found that people who sought advice have seen a total boost to wealth in pensions and financial assets of £47,706.
The wealth uplift from advice comprises an extra £31,000 of pension wealth and over £16,000 extra in non-pension financial wealth.
One of the key findings from the research is that the proportionate impact of taking advice is greater for those of more modest means. For the ‘affluent’ group identified in the research, the uplift from taking advice is an extra 24% in financial wealth (eg shares, ISAs, bank accounts) compared with 35% for the non-affluent group. On pension wealth, the uplift is 11% for the affluent group compared with 24% for the non-affluent.
An explanation for the improved outcomes for those who take advice is that they are more likely to invest in assets which offer greater returns though with greater risk. Across the whole sample, the impact of taking advice adds around eight percentage points to the probability of investing in equities.
The research also found that those who were still taking advice at the end of the period had pension pots on average 50% higher than those who had only taken advice at the beginning of the period. However, this result is not controlled for other differences in characteristics, so may at least in part reflect greater engagement by those who have larger pension pots.
Steve Webb, director of policy at Royal London, said: "Many of those who receive financial advice can testify to its value but it has always been difficult to quantify. This research uses the latest statistical methods to identify a pure ‘advice effect’ and it is strikingly large.
"If financial advice can add £40,000 to your wealth over a decade compared with not taking advice, it is incumbent on government, regulators, providers and the advice profession to work together to make sure that more people are sharing in this uplift."