Does The Value of an Advisor Affect Your Portfolio?

Research by Vanguard,^* Russell Investments,^** and Envestnet|PMC’s Quantitative Research Group,^*** have shown a potential for at least 3% in additional net returns produced by having an advisor who provides cogent financial planning, portfolio management, and guidance. In other words, having a financial planning firm serving your needs and paying attention to your goals and investments brings value that often can exceed the fees charged.

We work on a project basis, an hourly basis, or an asset-based fee. Specific information about fees are disclosed on page 6 of our ADV.

Value-Added Services Include:^***

1. Financial Planning- The potential added value is difficult to quantify precisely for all the sub-components of financial planning, but for asset location advice alone it is about 50 basis points of the value annually.
2. Asset Class Selection and Allocation- An asset allocation that is diversified and consistent with the client risk profile and investment objectives can add 28 basis points of value.
3. Investment Selection- Selecting a strategy of active mutual fund managers can add 85 basis points of annual value to a diversified portfolio. Implementing a portfolio with passive investments can add 82 basis points of value each year.
4. Systematic Rebalancing- The process of systematically rebalancing can add 44 basis points of value each year.
5. Tax Management- Managing a portfolio for tax optimization can add 100 basis points of added value when compared to a portfolio that is not actively managed.

^{*Vanguard Research, 2014, “Advisor’s Alpha”
**Russell Financial Services, Inc, 2015, “2015 Value of an advisor: Once again, greater than 1%”
***Envestnet|PMC’s Quantitative Research Group, 2015, “Capital Sigma: The Sources of Advisor-Created Value”}