Russell Investments’ 2023 Value of an Advisor report has broken down three types of financial advisers.
According to the study, advisers and their varying roles in a client’s life fall into three different categories: guide, guru and gladiator.
A ‘guide’ adviser helps manage both a client’s practical and emotional burden of decision making when they may be overwhelmed by their financial affairs.
“For other clients who opt for control, advisers can act as a coach, or sounding board, who provides support to the person and their family,” the report said.
‘Guru’ advisers act as an expert and a voice of reason, which includes communicating financial knowledge to a client and “imparting the objective wisdom gathered during a career”.
When necessary, ‘gladiator’ advisers are an advocate on a client’s behalf when dealing with more serious or time-consuming issues.
The report continued: “This could mean challenging a refused insurance claim, chasing beneficiary payments, or managing administration of finances. In all instances, it allows a client and their family to focus on what is important to them.”
According to Neil Rogan, Russell Investments’ managing director and Australian head of distribution, advisers switch between these roles throughout their client relationship.
“Beyond the technical skills, it is vital that advisers are equipped to manage and communicate
their value in building successful relationships and tailoring financial plans that give clients
peace of mind,” he commented.
More broadly, Russell Investments calculated that advised Australians are 5.9 per cent per annum better off than non-advised investors. This was an increase of 1 percentage point from 5.8 per cent in 2022.
The added value of an adviser is calculated using five factors of advice delivery: behavioural coaching is worth 3.4 per cent, appropriate asset allocation equals 1.2 per cent, tax-savvy planning and investing is 1.3 per cent, choices and trade-offs are variable whilst an adviser’s years of professional expertise is considered priceless.
“For the past two years, advisers have increased their value to clients, proving yet again why
they are the trusted expert in the room that Australians desire when there’s uncertainty in
domestic and global investment markets,” Rogan said.
With behavioural coaching contributing 3.4 per cent to the value of an investors’ portfolio, he identified why this type of advice is valuable for unadvised investors who may make rash decisions or constantly change their investment strategy.
Additionally, clients with an advised strategy is crucial for asset allocation, which is responsible for over 85 per cent of an individual’s investment outcome.
“Retail investors are more likely to recall individual stock performance rather than focusing on
broader asset classes and the overall investment strategy. An adviser adds value by bringing a
disciplined and sensible approach to meet their clients’ needs.”
Somebody took the time to compile this?
Time well spent…I guess.