The help of a financial adviser has been able to boost a client’s portfolio by 5.2% per annum, according to new research.

The fourth annual Russell Investments Value of an Adviser Report study found that advisers’ biggest contribution to clients is their behavioural coaching role, which was most beneficial from the onset of the pandemic.

During COVID, a critical mistake non-advised investors made was to abandon their long-term investment strategies and sell out of equities after dramatic market falls, resulting in them missing out on investment gains as the market recovered.

As an example, an investor who started 2020 with a portfolio worth $250,000 and stayed the course to 31 May 2021 and did not switch to cash would be $40,000 better off.

Further, advised clients benefited with a 5.2% boost to their portfolio, calculated based on key elements. The financial adviser was able to prevent behavioural mistakes (2%); advise on appropriate asset allocation (1.1%); optimise cash holdings (0.6%); and advise on tax-effective investing and planning (1.5%).

Russell Investments director and head of business solutions Bronwyn Yates said investors who have been educated by a financial adviser understand there will be ups and downs along their financial journey, so they feel comfortable in staying the course.

“The value of advisers has never been more obvious than during the past year and is particularly apparent now as many Australians use their time in lockdown to renew their interest in investment markets. While it’s positive that investors across generations are becoming more engaged with their finances, and that they have more guidance options than ever before, the value of professional advice clearly speaks for itself in our report findings,” she said.

The study also shows advisers that their value goes beyond choosing the appropriate mix of asset classes –  it quantifies the technical and emotional guidance of an adviser to deliver services and value above and beyond investment only advice.

Yates added the report aims to provide advisers with a resource to help articulate and quantify the value they provide clients throughout the advice journey.

“The value of an adviser is far greater than just placing clients’ money into investment products and updating them on their progress. Beyond the material value of financial advice, the peace of mind and comfort that advisers provide clients is critical and it is important for advisers to be able to clearly communicate those benefits,” Yates said.


Karren Vergara Financial Standard –  23 August 2021