Valuing an Advisor
/The value of an advisor is something that is inherently fluid, as every relationship is unique, and the advice provided is curated to the individual. The role of a professional wealth advisor is to help an individual realize their goals, set forth a plan to actualize those dreams, and help guide the client through the emotionality of the market.
Many have sought to put a monetary value on the benefit of an advisor, but it is difficult to pin down quantitatively due to the essential uniqueness of each client-advisor relationship. There are many components to creating a cohesive, clear, and personalized financial plan to grow and adapt to the many different stages of life. A few of the many forms of strategic advising include tax planning, estate planning, business succession planning, charitable and philanthropic planning, and investment management. The overarching goal of these various components is to make wealth complement an individual's lifestyle and discover what a meaningful use of wealth means for each client.
While no study can precisely state an exact value added through advisory services, both Vanguard and Envestnet Capital have tried to put a more theoretical monetary value on financial advisory services. The chart below depicts the findings from Vanguard’s Advisor Alpha white paper along with Envestnet Capital’s Sigma study. The two companies found around a 3% value is gained from professional financial advice on a portfolio and comprehensive wealth management. While this will differ for every individual client-advisor relationship, the studies demonstrate a clear monetary benefit is possible with a qualified advisor in addition to the time and stress relief that a professional can provide. Clearwater Capital Partners is not advocating these findings, but highlighting the breadth of services an advisor can offer to add value.
To learn more about their methodologies, follow the hyperlinks for Vanguard’s Advisor’s Alpha® Perspectives and Envestnet’s The Advisor Advantage.
The behavioral coaching mentioned in the study refers to the discipline a professional investment manager can instill into an account to prevent potential mistakes driven by emotional reactions. Stock market fluctuations trigger an emotional response, often causing investors to panic sell while markets are down and to buy in when markets are high. This is detrimental in investment accounts, and dramatically changes the potential returns in a portfolio. An investment advisor can help keep the client’s end goal in mind and prevent an emotional reaction from damaging a personally curated plan. A client-advisor relationship fosters a financial plan which is tailored to the individual, with the flexibility to accommodate various life changes, without compromising the client’s goals.
A large component to financial advising that no study can put a monetary value on goes beyond purely financial results and is reflected in quality of life. Professional guidance and decision making allows the individual to focus less on the complexity of planning and more on their goals. The value of time is a large consideration for many High-Net-Worth individuals. Utilizing an advisor’s capabilities allows successful individuals to spend more time on their businesses, their families, and their goals.
C³ Difference
Clearwater Capital Partners creates financial plans that are fully encompassing, ranging from tax efficient strategies, to navigating philanthropic contributions, to creating a clear investment strategy that suits the varying needs of individuals. Clearwater Capital Partners is fiercely fiduciary, positioning our clients’ best interest at the epicenter of our firm, fostering lifelong and generational advisory relationships.
Our carefully designed C³ process focuses on clarity, conviction, and commitment in an effort to deliver first-rate services and results to our clients. C³ guides our client-advisor relationships, cultivating discipline in our plans, and placing the long-term goals of the client as the focal point of our process.
Clearwater Capital Partners focuses on the end objectives of our clients by investing in training and development for our advisors in order to provide thorough plans for the various complexities of our high-net-worth clients. Through continuing education, Clearwater Capital Partners strives to stay up to date on new investment tools and strategies to fully maximize our array of financial expertise for the benefit of our clients. In positioning education and quality-of-service as non-negotiable values, Clearwater Capital Partners will continue working to provide exceptional service for generations to come.
