Financial advisers added at least 5.7% in value for clients over the past year by providing counsel across the full breadth of their affairs – from investing to tax planning, social security and estate planning, according to Russell Investments’ seventh annual ‘Value of an Adviser Report‘.
More than half of this benefit was derived from advisers’ ability to help people avoid kneejerk decisions amid market volatility and economic uncertainty. This included encouraging clients to remain disciplined and reweight portfolios as global share markets reached record highs – despite the temptation to chase more gains.
“Advisers are much more than financial experts – they are also behavioural coaches who help clients cope with the emotional rollercoaster of both investing and life itself,” said Neil Rogan, Russell Investments’ managing director, head of distribution in Australia and New Zealand.
Russell Investments’ Value of an Adviser equation is calculated by adding together the estimated benefit of an adviser’s guidance on asset allocation (1.1%), behavioural coaching (3.3%) and tax planning (1.3%).
“Advisers’ practical support also helped clients maintain strategies like dollar cost averaging as rising inflation cut their disposable income,” Rogan said.
The report also highlights common challenges that advisers and their clients face in 2024.
These include:
• The financial burden faced by single retirees with insufficient capital to support themselves
• Increased demands on grandparents to pay school fees or help with housing costs
• The risk of inadvertently breaching tax regulations and incurring penalties
• A cost-of-living crisis that stymies the efforts of younger generations to pay off HECS and purchase property.
“This year’s findings highlight the real role advisers play in securing the future of their clients. It is a role closely aligned to Russell Investments’ own purpose of providing investment solutions that help more people retire with dignity,” said Tim Furlan, Russell Investments’ managing director, Australia and New Zealand.
Rogan concluded: “It’s important advisers continue to communicate their value to clients. This report shows that if an adviser can help clients avoid common behavioural mistakes, they likely provide value above and beyond their fees.”
