It’s not easy to navigate today’s financial markets on your own. In rapidly changing markets, an investment professional can provide valuable guidance and help keep your financial plan on track. The benefits of working with an advisor are well known. There’s quantifiable evidence to support how working with an advisor can improve savings, investor confidence and retirement readiness.
Two reports, by the Center for Interuniversity Research and Analysis of Organizations (CIRANO),shed light on the financial and emotional benefits that investors receive when they work with an advisor. The results of these reports are dramatic but, given the known benefits of working with an advisor, they are not surprising.
Here’s a summary of some of the key findings.
Profound impact on financial assets
The Gamma Factor and the Value of Financial Advice report (Montmarquette and Viennot-Briot, 2016) revealed households that work with an advisor over the long term have a greater amount of investable assets when the impact of other variables was removed. As the following chart shows, the effect on the amount of household assets is more pronounced the longer households receive advice. The chart shows assets for households that received advice over periods of four to six years, seven to 14 years and 15 or more years, as a multiple of the assets of households that did not get advice. So, for example, households that received financial advice for a period of more than 15 years built up their wealth by 3.90 times the amount of a household where no advice was received.1
Advice greatly enhances your savings discipline
One of the most important traits for successful investors is the ability to stick to a plan. The Gamma Factor and the Value of Financial Advice report also discovered that an advised investor will typically have 188% more financial assets, or 2.88 times the level of financial assets than a non-advised investor.1
Boosts your prospects for a better retirement
While the first two “values” were clearly about money and having more of it, the value of retirement readiness is not as tangible—it is about having peace of mind and confidence. The Econometric Models on the Value of Advice of a Financial Advisor report found that over 56% of households that receive financial advice indicated with a score of six or higher (out of 10) that they were confident about having a comfortable retirement. Conversely, just over 40% of non-advised households felt the same way. Understanding the role of advice is an important complement to knowing what fees are being paid because advice is worth the costs if it helps people invest better.2
Based on the data from these reports, the value of advice is clear—advice helps investors save more money, stay disciplined (when others panic) and feel more confident about retiring comfortably.
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