The value of your adviser

Michelle Bromley CFP®, Director – Strategy and Advice

There are many benefits, tangible and intangible, of obtaining professional financial advice. 

The value contributed to your situation by your financial adviser outweighs the fee you are paying through delivering both tangible and intangible benefits, including: 

  • Appropriate asset allocation 
  • Managing investment risk 
  • Behavioural coaching  
  • Setting & tracking goals 
  • Cash Optimisation 
  • Improve financial literacy 
  • Technical expertise & efficiency 
  • Tax effectiveness 
  • Lower product costs 
  • Improved product benefits 

The annual Russell Investments Value of an Adviser Report quantifies the additional notional increase in client capital driven by unlocking the value of professional financial advice. 

For the financial year ended 30 June 2021, that’s an estimated additional 5.2% derived from the following advice areas. 

The survey found that many investors were seeking guaranteed or stable returns while they had longer timeframes for investment.  The cost of a too conservative asset allocation over the long term means they’re missing out on 1.1% p.a. of investment return. 

In addition, the cost of holding cash at historically low interest rates and considering the effect of inflation eroding the purchasing power of capital was a further 0.6% p.a. versus investing in a diversified fixed interest portfolio. 

Having a tax-efficient portfolio is worth a further 1.5% p.a.. Tax structuring advice, such as building wealth within superannuation where the tax rate is 0% – 15% or using other structures like private trusts to share income and companies at a 30% tax rate, can lower overall tax payable. Tax-aware investing considers the types of income generated within these structures, for example, taking best advantage of capital gains tax discounts and franking credit refunds. 

Behavioural coaching when making investment decisions adds a further 2.0% p.a.. You’ve heard the saying that what’s important is time in the market, not timing the market? Over the longer term investors who remain appropriately invested throughout turbulent markets have better outcomes than those who try to sell down and buy back in later. In the 2020 COVID market sell-off, those who sold low in March had to buy at higher prices during the later market recovery, compounding losses. 

Add to this any product-related savings, such as obtaining a lower insurance premium or consolidating multiple superannuation accounts to a lower-cost fund, and the tangible benefits start to add up over time. 

There are even greater benefits to having a trusted financial adviser on hand, which are assessed as priceless

The average Australian does not have the financial acumen of a qualified, knowledgeable, and experienced financial adviser. 

Having an ongoing relationship with a financial adviser who initially assists you to identify your needs, goals and objectives and can translate this into a series of advised strategies designed to meet these needs, can help you track progress toward achieving your goals, such as having a comfier retirement lifestyle, and can help you feel more secure about your financial future. 

Your adviser can use their technical knowledge and expertise to navigate you through your investment, superannuation, insurance, and taxation needs.  They can help you improve your financial and investment knowledge over time, giving you more control over your financial circumstances. 

Whether you’re a time-poor and busy professional or a retiree who doesn’t want to Do It Yourself, your adviser can take control of implementing strategies and products, give you access to administration platforms and discretionary investment solutions to increase efficiency, and reduce the burden of administration and day-to-day investment decision making from you. 

Probably the most important benefit of financial advice is the increase in your sense of wellbeing that flows from having the confidence that you’re on the right path to achieving your goals while protecting yourself and your family along the way.   

Peace of mind is truly invaluable! 

Source: Figures quoted from the Russell Investments “2021 Value of an Adviser Report” 

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (www.primefinancial.com.au/fsg) for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.

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