168 – The value of advice

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Today we are talking about the value of advice.

We are hoping to shed some light on how things are evolving in the financial services world.

In the past and currently buying an investment has fees that are not as obvious – hidden in fine print.  What this is evolving to for financial planners/advisors is a fee for service (similar to an accountant or lawyer).  There has been some apprehension around this situation.

There are 2 group types, one that is trying to have the lowest fee, and the other school of thought is to provide quality service and a better plan.  Sometimes we get caught up on the micro details (the doom and gloom) and we lose sight of the macro details.  Marketing and media can cause fear.  Sometimes you need the human involvement in your plan.

What used to be hidden, will now be seen in a fee for service environment.  There needs to be some value that is obvious to the investor.

In reading through an article, “Value of an Advisor”, we see what and where the value is.

Essentially, there are 5 areas:

A = Annual rebalancing of investment portfolios

B = Behavioral mistakes individual investors

C = Cost of basic investment – only management

P = Planning costs or the costs of providing a financial plan, updates and your services

T – Tax-aware planning/investing

What we are seeing is that advisors are not looking at the value of their services.  As a client, do you want the cheapest advice or the value of professional advice.

As a client, do your research, and as an advisor, don’t undersell yourself.

Episodes mentioned in the show:

Episode 53 – An excerpt from David Swenson’s article – Have an equity bias and be diversified  

Episode 5 – Talking about “buckets” for your financial plan with Trevor Parry   

Episode 166 – The behavioural mistakes/costs  

Episode 35 – The evolution of the investment process – Just Wealth   

Episode 65 – Cost-Effective wealth management – Just Wealth  

About the author, Jurgen

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