Recent studies have suggested the benefits of financial planning go beyond simply having enough money.
US research conducted by the Leeds School of Business in Colorado found people in the UK and the US who planned for their financial future were likely to live longer than those who did not.
It also found people with the least wealth benefited the most in terms of decreased mortality risk.
“Proper financial planning can reduce family disputes related to money, leading to more harmonious relationships”
Another US study by the Financial Planning Standards Board found improved financial wellbeing had a positive impact on health and family life by alleviating stress.
These benefits perhaps would surprise potential clients, though not advisers. But are there any other hidden benefits to financial advice we should all be shouting about?
Family and community
Financial advice is not only about the client and their money — it can also have a positive impact on family relationships and the local community.
“Proper financial planning can reduce family disputes related to money, leading to more harmonious relationships,” says St James’s Place chartered tax adviser Obi Nnochiri.
“A huge part is giving emotional support to clients, so they know someone cares and is there for them”
“Financial advisers can also facilitate discussions about financial goals within families, fostering better communication and understanding among family members.”
Advice may also have a knock-on effect on family members, according to James Tucker, chief executive at adviser tech firm Twenty7tec.
“This is not just because of the money saved or invested but because your children, and even grandchildren, will see you making good financial decisions and will continue that, passing it down to further generations,” he says.
If clients have surplus wealth, philanthropy can provide an opportunity for younger generations to get on board and learn about money management.
“We’ve recently told a few clients they can retire early — that is the financial freedom we all want”
“Financial stability can empower individuals to contribute to charitable causes, positively impacting the community and society as a whole,” says Nnochiri.
Financial advisers often act as a sounding board for their clients, which can be useful in being alert to financial scams.
“Many of us find ourselves talking at someone and resolving the issue ourselves simply by conveying it out loud,” says Clare Bowen, partner at accountancy and business advice firm Monahans.
“When you understand what makes clients tick, you start to put the portfolio and person together”
“The benefit of speaking to a finance professional is they know the right questions to ask, to help clients reach their decision.”
Rather than acting as an ‘echo-chamber’, as friends and family may feel obliged to do, advisers will give informed guidance, says Bowen.
“They have no pressure or loyalty to tell a client simply what they want to hear and can instead deliver honest feedback, even when it won’t be popular.”
Financial advisers can also help clients work out what they really want to do with their life.
“When you understand what makes clients tick, you start to put the portfolio and person together,” says Old Mill chartered financial planner Tom Parry.
Whether clients want to swim with dolphins or spend time with family, advisers will tease this out and help them realise that dream.
“Financial stability can empower individuals to contribute to charitable causes, positively impacting the community and society as a whole”
“Sometimes a client will come to us and say, ‘Can you look at this pension?’ It takes a bit of skill and experience to expand on that and tease out what they really want to do,” adds Parry.
Advisers often find themselves providing emotional support, especially during major life events.
“Clients may be wondering whether they can afford to retire, whether they have to carry on working, or what they will do when they retire,” says Liam Chapman-Lyes, a wealth planner at Succession Wealth. “We’ve recently told a few clients they can retire early — that is the financial freedom we all want.”
“Your children, and even grandchildren, will see you making good financial decisions and will continue that, passing it down to further generations”
When a client loses a loved one, the support advisers provide is often a mix of the professional and personal.
“A huge part is giving emotional support to clients, so they know someone cares and is there for them,” says Chapman-Lyes. “They need someone who can answer the difficult questions and point them in the right direction.”
Source: Amanda Newman Smith, MoneyMarketing, 14-November-2023.
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