Measuring the Value of a Financial Advisor

Michael Espinoza

What's the value of a financial advisor?

Two studies found that working with a financial professional can result in higher returns and potentially lower personal stress.

Lower Stress

Seventy-seven percent of people within 11-15 years of retirement are stressed when thinking about retirement savings and investments.¹

Working with a financial advisor to develop a written retirement income strategy, however, can increase your financial confidence leading up to retirement, according to Franklin Templeton’s annual Retirement Income Strategies and Expectations Survey.

With and Without²

Investors... Worry about running out of money Worry about being a burden on family
With an advisor 23% 5%
Without an advisor 30% 6%
 

Higher Returns In addition to providing financial guidance, financial advisors may also add about three percentage points in net portfolio returns over time, according to a study by Vanguard.³

Financial Advisor Advice Components 

Advice Advice Elements Potential Added Return to Investor Portfolio
Portfolio Construction Asset allocation
Asset location
Up to 1.2%
Wealth Management Rebalancing
Drawdown strategies
Up to over 1%
Behavioral Coaching Managing investor emotions
Aiding decision-making
Up to 1.5%

It’s important to remember that financial advisors also may offer guidance that wasn’t measured in the two studies. Advisors can help develop strategies that protect against the financial consequences of loss of income, and coordinate with other financial professionals on tax and estate management.

1. Franklin Templeton, 2016

2. Franklin Templeton, 2016

3. Vanguard.com, 2015

4. Vanguard.com, 2015

 

Michael Espinoza

Michael Espinoza

CRPC

Michael is a financial services representative for Yeo & Yeo Financial Services and leads the firm’s Financial Services Team. He has 14+ years of financial services experience and is based in the Saginaw office. His areas of expertise include retirement services for businesses and employee benefit plans, succession planning, investment, tax and financial planning for businesses, individuals, trusts and estates. Contact Mike at 800.968.0010 or email info@yeofinancial.com.