Study Shows Financial Advisers Boost Client Portfolios by 5.7%

A recent study by Russell Investments reveals that financial advisers contribute a 5.7% value increase to client portfolios, a slight decrease from last year’s 5.9%. The annual Value of an Adviser Report, now in its seventh edition, highlights the consistent benefits advisers provide, especially in a year marked by a bull market and rising living costs.

The 5.7% added value is attributed to asset allocation advice (1.1%), behavioural coaching (3.3%), and tax planning (1.3%). According to Neil Rogan, head of distribution for Russell Investments in Australia and New Zealand, more than half of this value stems from advisers helping clients manage their reactions to market volatility and economic shifts. This includes maintaining discipline and adjusting portfolios amidst global market peaks and the temptations of potential gains.

2024 posed unique challenges, such as managing investor excitement driven by AI advancements and expected interest rate cuts, which pushed markets to new heights. Rogan emphasised the importance of regular portfolio rebalancing by advisers to uphold long-term financial plans, which helps investors see the historical benefits of a steady investment approach over succumbing to market euphoria and subsequent panics.

Rogan also noted that advisers serve as behavioral coaches, aiding clients in adhering to strategies like dollar-cost averaging, even as inflation reduces their disposable income. Despite a slight decrease from 2023's added value of 5.8%, advisers continue to play a crucial role in guiding clients through complex financial landscapes.