Measuring the Value of a Financial Advisor

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June 2, 2016

What’s the value of a financial advisor?

Two studies found that working with a financial professional can result in higher returns and potentially lower personal stress.1,3

Lower Stress

Seventy-six percent of people within 15 years of retirement are stressed when thinking about retirement savings and investments.2

Working with a financial advisor to develop a written retirement income strategy, however, can increase your confidence and happiness, according to Franklin Templeton’s annual Retirement Income Strategies and Expectations Survey.

With and Without

Investors Confident with Plan Happy with Plan
With an advisor 91% 92%
Without an advisor 44% 44%

 

Higher Returns

In addition to providing financial guidance, financial advisors may also add about three percentage points in net portfolio returns over time, according to a study by Vanguard.3

Financial Advisor Advice Components4

Advice Advice Elements Potential Added Return to Investor Portfolio
Portfolio Construction
  • Asset allocation

  • Asset location

Up to 1.2%
Wealth Management
  • Rebalancing

  • Drawdown strategies

Up to over 1%
Behavioral Coaching
  • Managing investor emotions

  • Aiding decision-making

Up to 1.5%

It’s important to remember that financial advisors also may offer guidance that wasn’t measured in the two studies. Advisors can help develop strategies that protect against the financial consequences of loss of income, and coordinate with other financial professionals on tax and estate management.

1 Franklin Templeton

2 Franklin Templeton

3 Vanguard.com

4 Vanguard.com

 


 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2017 FMG Suite.

 


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