The advantages to you of having an Independent Financial Adviser

Oct 9, 2019 | Tony Byrne's View

Dan Sullivan is a highly renowned Canadian coach, most of whose clients are financial advisers from primarily English speaking countries. Dan has been coaching for decades. He wrote a short book called “The Good That Financial Advisers Do”. I have unashamedly listed below the chapter headings in order to give you a feel for what good we do.

Long term , practical financial guidance in a world where change is speeding up and making the future more uncertain.

A solid, evolving financial game plan that large bureaucracies can no longer provide

Providing custom-designed knowledge and wisdom in a world of overwhelming and confusing information

A single, personal coordinator of many different kinds of important experts

Providing a process of shortcuts and time-savers that is impossible for outsiders to understand or implement

Providing increasing clarity, confidence and capability that are crucial to your clientele for their individual progress

A professional framework that will be even more valuable 25 years from now

Taking advantage of superior tools and systems that will continually be created to multiply your results

Continually learning how the most successful people plan and lead their lives

Being and feeling more and more that you are in the mainstream of human progress

Research shows that there are three major benefits in your becoming financially free.

  1. You live longer.
  2. You live a healthier life.
  3. You experience less relationship breakdowns resulting in less broken homes.

Undoubtedly IFAs do help their clients to become financially free hence their role is extremely important in society.

In addition to the above benefits a fund management company called Vanguard produced a study some years ago called Adviser Alpha in which they concluded that the value of a typical Independent Financial Adviser was 3% a year to the average client. It compares very favourably with a typical IFA fee of 1% per annum of funds under management.

The Adviser Alpha study did not purely relate to investment performance either.

Figure 1. Vanguard quantifies the value-add of best practices in wealth management

Vanguard’s Adviser’s Alpha strategy modules Module number Value-add relative to “average” client experience
Suitable asset allocation using broadly diversified funds/ETFs I >0 bps
Rebalancing II 0-43 bps
Cost-effective implementation (expense ratios) III 66-92 bps
Behavioural coaching IV 150 bps
Tax allowances and asset location V 0-23 bps
Spending strategy (withdrawal order) VI 0-48 bps
Total-return versus income investing VII >0 bps
Potential value added About 3%

Source: Vanguard

Notes: Return value-add for Modules I and VII was deemed significant but too variable by individual investor to quantify. Also for “Potential value-added,” they did not sum the values because there can be interactions between the strategies.

Based on the above it is pretty clear that there are many advantages in having an Independent Financial Adviser. So if you do not already have one why not get in touch with us? You know it make sense.


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