2021 Value of an Advisor Study
From: Russel Investments: Full Study
A sharper focus on the value of your advice.
Executive summary
Russell Investments has always focused on the value of advisors. And never was an advisor’s value so obvious as during 2020.
It was a year that tested both investors and advisors in so many ways. Financial markets fell sharply early in the year when the global spread of the COVID-19 virus forced a sudden shuttering of economic activity, only to recover strongly in the final months on positive vaccine news. Through it all, many of us found ourselves reassessing our lifestyles and our way of doing business. Many of us may have found our priorities and outlooks have changed—as those of your clients may have.
That’s why we think it is the perfect time for you to place a sharper focus on the full value of your advice and ensure you are communicating that value to your clients.
Our simple and handy formula can help you show your clients the overall value you bring to them. To better reflect the changing role of a financial advisor, we’ve reassessed the formula we use in our annual report. After all, it’s likely that you’re not just a broker anymore. Given the holistic wealth management advice you may provide to investors and their loved ones, your role is now more likened to a family wealth advisor. Our new formula takes a closer look at that broadened role. It more closely reflects the tangible benefits for clients—such as receiving a customized client experience, or ensuring the products held in their portfolio align with their goals, circumstances, and preferences.
Given the volatility seen in 2020, it’s no surprise that the biggest contributor to advisor value is your role as a behavioral coach. In fact, this category on its own more than offsets the 1% fee advisors typically charge for their services.
Let’s take a look at the full value equation of an advisor’s services. It’s as easy as ABC and clearly shows that the estimated value is much greater than the typical advisory fee.
In 2021, we believe the value of an advisor in the U.S. is 4.83%.
