The wealth gap between UK households who receive financial advice and those who have no financial plan in place is around £155,000 on average, research from St James’s Place (SJP) has shown.

Its Financial Health Report, which assessed wealth and financial wellbeing levels, excluding property, over the past 12 months, revealed that those receiving financial advice had an average wealth of £236,897 compared to £82,364 amongst households without a financial plan.

Almost four in 10 (39 per cent) UK adults had some kind of financial plan in place, increasing to 60 per cent amongst those who had received financial advice over the past 10 years, and had an average wealth of £191,536.

More than six in 10 (65 per cent) said having a plan made them feel more confident in their financial position, while 52 per cent felt their financial position was ‘comfortable’ compared to 36 per cent without one.

Overall UK household wealth, excluding property, increased by 12 per cent to an average of £126,483 over the past 12 months amid rising pay, and better savings rates and investment performance.

However, SJP found that the cost-of-living strain had caused more people’s financial situation to worsen than improve, with 58 per cent stating they do not feel financially comfortable and 25 per cent feeling anxious about the year ahead.

While there was an overall increase in UK wealth, more people felt worse off (31 per cent) than better off (21 per cent) compared to a year ago, with 71 per cent of those who have seen their financial situation worsen saying the cost of living had limited their ability to manage their money.

More than a quarter (26 per cent) did not feel financially ‘resilient’, with 31 per cent having less than £10,000 in savings, investments and personal possessions, and 10 per cent having no safety net at all.

Younger generations were more likely to be taking proactive steps to put financial plans in place, with 52 per cent of under-35s having a plan compared to 28 per cent of over-55s and 41 per cent of 35-54 year olds.

“The financial health of the nation is clearly a mixed picture,” commented SJP director of advice policy & operations, Alexandra Loydon.

“At a headline level, pay rises and better returns on savings and investments have driven an increase in average household wealth this year, but many continue to feel the pinch when it comes to day-to-day expenses.

“High energy, food and fuel costs continue to impact both the pound in people’s pockets and their ability to put money aside for the future, as well as widening the wealth divide further. While this naturally impacts those on lower incomes the most, wealth can often be tied up in possessions or longer-term savings, so incomes are being stretched more widely.

“Looking ahead to the rest of the year, consumer confidence is likely to remain fragile as several factors contribute to ongoing financial pressures on households. To navigate this backdrop, it’s crucial that people take steps to make their money work harder. Our research shows just how much of a difference a financial plan can make in building better financial health, regardless of age, income or where we live.

“It’s great to see the younger generation – who we’ve termed ‘Generation Plan’ – leading the way in this regard, adopting a proactive approach to both short and long-term finances. Building these habits from as early an age as possible, and maintaining them through all stages of life, will stand them in good stead both now and in the future.”

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