Canadian financial advisors provide 3.52% in value to clients by delivering comprehensive wealth management services, a study from Toronto-based Russell Investments Canada Ltd. has found.
That’s more than double the typical advisory fee of 1.50%, according to the firm’s ninth annual Value of an Advisor study, which was released Thursday.
The study arrived at the 3.52% figure by calculating the additional returns a human advisor generates across four categories — behavioural coaching, customized family wealth planning, tax-smart planning and investing, and active rebalancing and asset allocation.
Among these categories, behavioural coaching was found to add the most value at 1.43%.
“Keeping investors from following their hearts and not their heads is one of the most important roles an advisor plays. And every year, this role of behaviour coach invariably provides the highest value in our formula,” Russell Investments said in its report.
Customized family wealth planning added 1.13% in value, followed by tax-smart planning and investing at 0.68%, and active rebalancing and asset allocation at 0.28%.
“Our study powerfully quantifies our strong conviction in the value that advisors bring to their clients,” said Danny Kabeya, divisional director for Russell Investments Canada’s advisor and intermediary solutions business, in a news release.
“An advisor’s work to guide clients holistically through defining moments of their lives, to ensure investments align with their goals, to provide expertise on taxes and insurance, as well as to plan for their retirement, long-term care needs and estate planning — among a myriad of other services — adds value.”
The value of advice has slightly decreased over the past few years. In Russell Investments’ 2023 report, it was documented at 3.90%, and in 2022, it was 3.95%.