The firm’s Emotional and Time Value of Advice report, surveying more than 12,400 Vanguard advised clients in the US, assessed the benefits of financial advice beyond the strictly financial returns.
Some 71 per cent of human-advised clients and 47 per cent of those receiving digital advice reported an increase in positive emotions, such as confidence and security, compared to when they were managing their own finances.
Around eight in 10 (79 per cent) of those seeing a human adviser and 57 per cent of digitally advised clients likewise reported a decrease in negative emotions, and 86 per cent of respondents overall said they now have greater peace of mind.
“We find that human advice increases positive emotions and decreases negative ones, while digital advice mostly decreases negative emotions. Finally, both types of advice show stronger results in decreasing clients’ negative emotions about their finances,” the report said.
“Human-advised clients are more likely to report improvements in their emotions, consistent with previous research,” Vanguard senior behavioural economist, Paulo Costa, said. “What’s somewhat surprising is how digital advice does well in helping clients not feel anxious or ashamed when interacting with the service. For example, 85 per cent of digitally advised clients report not feeling ashamed when using digital advice.”
Not only were they benefiting from greater emotional wellbeing, Vanguard found that three-quarters (76 per cent) of those accessing financial advice also saw considerable time savings.
While human-advised clients were more likely to report saving time because of financial advice (78 per cent), just shy of two-thirds (62 per cent) of digitally advised clients were also seeing this benefit.
The report found advised investors are spending around 3.8 hours per week managing their finances compared with 5.5 hours for self-directed investors, adding up to more than 100 hours a year saved as a result of financial advice.
According to the research, respondents were able to spend this extra free time on leisure activities (49 per cent), time with family (35 per cent), exercise (29 per cent), and household chores (27 per cent), further boosting their overall wellbeing.
While the financial benefits of accessing financial advice are generally well understood, the report suggested that “investors may be underestimating the full range of value that advice provides”.
Marsella Martino, Vanguard investment strategy analyst, said: “The peace of mind and time savings that clients experience should be integral metrics when evaluating the value of financial advice.”
Looking at clients’ initial reasons for signing up for financial advice, Vanguard found that portfolio value (87 per cent) was the leading motivator, followed by emotional value (74 per cent), financial value (69 per cent), and time value (38 per cent).
However, once clients had started receiving advice, perception of the emotional and time benefits rose significantly to 86 per cent and 76 per cent, respectively.
