Do Your Clients Understand Your Value?

There are various ways that advisors provide value to their clients, but let’s quickly review the most important ways advisors improve financial outcomes for clients.

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    Do Your Clients Understand Your Value?

    Do Your Clients Understand Your Value?

    There is considerable skepticism in many corners about the value of a financial advisor, ranging from traditional media outlets to the guy in the basement blogging on financial matters. Of course, this mistrust is nothing new—after all, “Where are the Customers’ Yachts?” was published in 1955.

    There are various ways that advisors provide value to their clients, which you know as well as anyone; however, let’s quickly review a few of the most important ways advisors improve financial outcomes for clients.

    1. Financial advisors help individuals create a plan and execute it to achieve long-term goals. This is no inconsiderable feat given the human predilection to live in the present at the cost of the future. Consider that one in three Baby Boomers have less than $25,000 in retirement savings.1 This unfortunate state of affairs would likely have been much less dire if they had engaged an advisor early in their careers.
    2. Financial advisors moderate the worst behavioral instincts of investors, which most typically involve taking on too much risk when the market is booming and exiting the market after a sharp decline. Dalbar annually quantifies how badly investor returns trail investment returns.
    3. Financial advisors lend their education and experience to a range of financial decisions individuals would otherwise make with less information and skill.

    The Research Proves It

    Advisor value shows up in the research. Investment professionals by now are very well acquainted with the Vanguard study indicating that advisors can add up to 3 percent of value to client relationships.2

    Taking a different approach, Morningstar’s “Alpha, Beta, and Now…Gamma” illustrates how good financial decision-making in retirement can add an alpha equivalent of 1.59 percent.3 The study focused on five key decisions: 1) total wealth framework to determine optimal asset allocation; 2) a dynamic retirement withdrawal strategy; 3) incorporating guaranteed income products; 4) tax-efficient allocation; and 5) portfolio optimization. Few retirees could competently make such decisions without the help of a financial advisor.

    Finally, in a study of 403(b) plans by AXA, participants who worked with an advisor had higher balances (nearly twice as high), contributed more and earlier, and were more satisfied with their account and its investment performance than participants who did not work with an advisor.4

    Here’s the bottom line on the value of an advisor—you reduce stress and help individuals achieve financial success, which fosters happier and more satisfied lives. Hard to put a price on that!



    See referenced disclosure (2) at 




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