Because investors’ needs vary greatly, as do the services advisors offer, it is challenging to assign a value to investment advice. Investment advisors’ practices range from making commission-based investment recommendations to providing full-service wealth management. The type of advice investors need depends on their personal situation—in particular the complexity of their financial life, their degree of knowledge of and interest for investment matters. Then, looking at potential advisors’ potential conflicts of interest, credentials and reference will help identify the right advisor.
In this series, we’ve looked at 12 different services that are available from investment advisors. Not every advisor will offer them all, nor are they all relevant to every investor. Most of the “non-quantifiable benefit” services regard portfolio process and governance, and the maximization of after-tax returns. We estimate that the “quantifiable benefit” services can boost investor returns by up to 3.22%. Each investor’s situation is different, so this number does not apply across the board. However, it does highlight that, while the services of a competent investment advisor do cost money, not hiring an advisor can also be quite expensive.
Services with Hard-to-Quantify Benefits
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Assessing your ability and willingness to take on risk
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Assessing your personal, business and family situation
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Preparing an Investment Policy Statement
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Designing your portfolio
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Reviewing your portfolio performance annually
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Integrating portfolio management with financial and tax planning
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Harvesting tax losses
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Locating assets
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Providing and executing a withdrawal strategy for retirees
Services with Quantifiable Benefits
|
|
Estimated Benefit |
| 10. Providing behavioural coaching |
1.50% |
| 11. Rebalancing portfolios |
0.41% |
| 12. Selecting investments |
1.31% |
| Sum of quantifiable benefits |
3.22% |
Other post in this series