The latest research into financial advice has shown Australian practitioners have made a noticeable difference to their clients with regard to their monetary situations and their confidence in managing them.
The Russell Investments “Value of an Adviser” report revealed financial advisers across the country added at least 5.6 per cent in value for their clients over the past 12 months by helping them to navigate markets, optimise portfolios and structure their financial affairs.
The ability to quantify the value an adviser added to a client’s circumstance was determined using a formula consisting of different relevant elements.
“Optimal asset allocation [accounted for] 1.2 per cent [of the result], behavioural coaching [accounted for] 3.1 per cent and tax-smart planning [accounted for] 1.2 per cent,” Russell Investments head of Asia-Pacific Jason Edgar explained at an industry briefing in Sydney today.
Edgar pointed out this year’s study went beyond this quantitative analysis and provided an insight into what the fund manager described as a value of advice index.
“[Here] we surveyed 700 investors both advised and unadvised and close to 200 advisers and we asked questions [like] why do you seek advice, why don’t you [seek advice], what do advisers see as the most value they add and what do clients suggest is the value they are really looking for,” he said.
“It yielded some compelling findings [and] one that really stood out for me was an overwhelming number of respondents talked about the value for money they get from advice.
“The interesting part was the perception of where the value is goes well beyond investment returns to themes around confidence and control and peace of mind and that really cut across a lot of [the survey’s] results.”
According to Edgar, the findings around the confidence Australians have about their financial goals really stood out.
“We asked, for those that [are not receiving advice], what’s your degree of confidence in achieving your financial goals. [Here] only 26 per cent of people said they were reasonably confident. Fast forward [to responses from people receiving] advice and that number jumps to 81 per cent,” he noted.
“So take that as a way of really quantifying that value of the gap advice is filling here.
“We’d suggest that for advisers then that’s a way to help you position even more the value that you’re adding to lean into those themes around confidence and control and positioning of what a client’s really looking for.”
