Recent Posts



Does financial advice work?

Its a simple question, and believe it or not, there's a simple answer, which is yes, people who engage with financial advisers end up wealthier than those who don't.

Let me back this up with a little evidence;

We often cite the CARANO report, a robust econometric study which you may or may not enjoy leafing through of an evening. If you'd like to read it, drop me an email and I'll send it over.

So, let me give you just one figure and then the reasons why (evidence based) financial advice works:

On average, how much better off are advised individuals?

Those who take advice on average end up with 173% of the terminal wealth of those who did not. This figure takes into account external factors such as starting wealth and education achievement. So for every €5,000 unadvised you has in your account at retirement, clever you who took advice would have €8,650.

Why do advised individuals outperform?

Its not rocket science, there are five key factors that make people who take financial advice more successful:

1) Efficient structures - Advised individuals implement efficient structures.

Optimal structuring leverages available tax efficiencies, controls cost and manages future risk.

3) Higher savings ratio – Advised individuals save more. Advice focuses thinking around matters such as optimising pension contributions analysing the long term impact of large discretionary purchases all of which will deeply affect how you save over time.

4) Behaviour – Advised individuals make less mistakes and hence avoid costly behaviour particularly where investment is concerned. For example, you might remember the crash of 2008, some people panicked and sold their shares, instantly crystallising a huge loss. Our clients, and anyone else who took good advice, held their nerve and made back everything, and then some profit.

5) Understanding investment risk – Advised individuals have a better understanding of investment risk and hence tend to take more risk when and where this is appropriate and avoid it where it is not.

(01) 662 9208

55 Ailesbury Road, Ballsbridge, Dublin 4, Ireland

©2020 SMP Financial. SMP Financial Ltd is Regulated by the Central Bank