How often have you heard people say that they don’t believe they need the services of a financial planner because they’re not wealthy enough? It’s a misconception based on the idea that financial advice is all about money.
Around 70% of Australians don’t currently have an advice relationship. It’s time we started focusing on the health benefits of financial planning.
Financial wellbeing is a critical component of overall wellbeing
The negative effects of financial issues can also affect other parts of people’s lives, including relationships with friends or family. During the COVID-19 pandemic, it was widely reported that many Australians experienced heightened stress and anxiety, particularly around issues of financial wellbeing, mental health and family relationships.
According to the ‘The True Value of Advice‘ research paper by IOOF (2020), financial advice improves the financial wellbeing of people who receive it. Moreover, better financial wellbeing flows onto better overall wellbeing, including improved mental and physical health and healthier relationships.
The truth is, people who have a financial adviser experience higher levels of financial wellbeing than those without; they are less prone to stress and even cite improved mental and physical health among the benefits of their advice relationship.
The value of professional advice
While building wealth and making good investment decisions are core to the value provided by financial advisers – the real value, from the perspective of consumers, also lies in how advice makes them feel and the problems it solves. It is about building self-awareness, feeling more in control, gaining confidence, setting goals and achieving them to attain peace of mind. It is important to note that those who experience financial advice are much more likely to identify the value of these non-monetary benefits than those who have yet to experience it
Advice also goes beyond juggling finances and helps us integrate our life plan priorities, defining the tangible and intangible things that are important to us. We can all attest to the complexity of budgeting for significant goals such as children’s education and holidays or having the reassurance that we are on the right track for a comfortable life as we age and get closer to retirement and the considerations that come with that.
A report by Fidelity based on an extensive survey of 2,228 Australians (2019) found that:
- 85% of Australians receiving advice believe it has given them greater peace of mind financially and 86.2% believe they have greater control over their financial situation
- 49.9% of people with an advice relationship say their mental health has benefited
- 77.1% felt that the advice they received enabled them to achieve their personal goals, including being able to live their desired lifestyle (43.1%) and not having to worry about money (42.7%).
Even Australians without an advice relationship said they felt their mental health would improve if they received financial advice (35.8%) and 64.4% thought advice would give them greater peace of mind financially.
The sense of control gained through financial advice causes people to worry less about money.
Individuals receiving financial advice say they have greater financial security and believe that they could cope for longer if they were suddenly unable to earn an income from working.
Furthermore, the value of advice transcends age, wealth and gender. It’s never too early or too late to start learning about money as your financial circumstances are ever-changing and you have different financial priorities and goals at different stages of your life. The way you manage your money is more important than making more money, and you don’t need lots of money to learn how to manage your finances.
The bottom line is professional financial advice provides benefits to people beyond the expected financial aspects, with mental health, family life and physical health often positively influenced.
Discover our KMT Wealth financial advice services here.
Source: Synchron, IOOF, Fidelity International