How financial advice helps create wealth.

An article based on a 16 year study by Vanguard Investments Pty Ltd. 

   

 

Last month we 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:

  • Suitable asset allocation
  • Cost-effective implementation (expense ratios)
  • Rebalancing
  • Behavioural coaching (Vanguard Investments found this to be the most significant contributor because there are some tasks people struggle with such as budgeting and expense management.  Behavioural coaching addresses this issue).
  • Tax efficiency (An example here is where an investor with a modest portfolio lost more than $250,000 in value over a 10-12 year period because they thought the three stock brokers they used were looking after tax related issues.  They weren’t!  If the planner had been involved sooner the outcomes would have been significantly different.)
  • Total returns versus income investing.

 

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. 

 

Peter Graham
PlannerWeb / AcctWeb

  

 

Any advice contained in this website is of a general nature only and does not take into account your circumstances or needs. You must decide if this information is suitable to your personal situation or seek advice.

Rolanda Adams Financial Services have been my financial advisers for over 20 years. I have always found them to be highly intelligent, knowledgeable and professional in what they do. Rolanda Adams Financial Services is accessible at all times and patiently explain terms that I do not fully understand. I can highly recommend Rolanda Adams Financial Services and it is a pleasure to do so. I do this with the utmost confidence. Marcia Montgomery (Retiree – home duties and ex-clerk with Water Board)
I retired Oct 2012, and seeking Financial Advice for my retirement funds, I decided to have Rolanda Adams Financial Services look after my financial affairs, and so happy I did. Since my retirement I am extremely comfortable with Rolanda Adams Financial Services’s advice, experience and strategies and the returns on my investments. Rolanda Adams Financial Services is my "Breath of Fresh Air" at this stage of my life and she makes herself available 24/7 should you need to talk with her. Steve Hoad (Ground Engineer, Qantas)
In 1997 I left Energy Australia and decided to join Rolanda Adams Financial Services for the financial support and advice that I would need into the future. That decision has proved a very good one and I am still with Rolanda Adams Financial Services who have given me advice and friendship over those many years. The advice given has ensured that my investments have been protected and the major loses, of some, during the GFC was not felt by me unduly. Rolanda Adams Financial Services and the team are very easy to contact at any time and one is always received in a most professional manner. I would be most happy to recommend Rolanda Adams Financial Services to all who need financial services. Graham Fleeton (Manager, Property Insurance Group Energy Australia)
Rolanda Adams Financial Services has been my Adviser for the past 18 years. Through their wide industry experience and professional expertise they have ensured the sound development and ongoing management of my investments. Their advice has invariably been sound, timely and entirely tuned to meet my personal needs in retirement. they have a friendly, engaging manner and are always readily available to address any of my concerns. I have no hesitation in recommending Rolanda Adams Financial Services. Neil O'Keeffe (Chief Inspector (retired), Australian Customs Service)

© 2024 Rolanda Adams Financial Services Pty Ltd. All rights reserved. Site by PlannerWeb.