Last month I reported on a 16-year study by Vanguard Investments that found a financial adviser effectively adds around 3% to the value of a client’s portfolio over time.
The real significance of this is that you can have a finance professional take care of one of the most important jobs in your life (funding your retirement) for very little, if any, real cost. This can even be the case for those with smaller portfolios.
However, for many people the main problem is getting started and the cost is often seen as too high or the adviser focus can seem a bit too much on their needs rather than the client.
A major reason for this, unfortunately, is that increased regulation and monitoring has meant advisers have moved to a fee-based model and away from the commissions of yesteryear. This is a good outcome but it has meant advisers have had to increase entry costs which, in turn, has led many potential clients to see these costs as too high. A proverbial Catch 22.
It is because of this sort of conundrum that firms like Vanguard Investments have undertaken long term studies. The outcome from their work is that a WIN/WIN opportunity exists for all.
However, this benefit isn’t just from better investing, though that will often be the case. It’s the more holistic approach that wins the day. Vanguard Investments identify the following areas as those that will generate this positive outcome:
Finally, the concerns many potential clients have over the cost of financial planning means they delay getting help early enough which, in turn, threatens the retirement outcomes they want to achieve.
AcctWeb / PlannerWeb
October - December 2018 archive