Do you need a Financial Advisor? Yes. You do. We all do. Why? Because expert independent financial advice will save you from making poor financial decisions and guide you towards a consistent and disciplined investment strategy. But don’t just listen to me, here’s the evidence.
1. To begin at home in Ireland, an independent survey of 1000 adults carried out for PIBA in 2013 showed that the average pension pot of advised individuals is 75% greater than the pensions of those that don’t use a financial advisor. And those who use a financial adviser on a regular basis, more than once a year, are significantly wealthier and more financially confident.
2. A comprehensive survey by CIRANO in 2012 compared Canadian households with the same starting wealth. It showed that those who use a financial advisor have 1.6 times more financial assets after 4-6 years of advice, 2 times more financial assets after 7-14 years of advice and 2.7 times more financial assets after 15+ years of advice. This significant wealth difference over time was attributed to the advisor encouraging more saving, better asset class diversification, tax efficiency and impartial fund advice.
3. The 2014 Vanguard Advisor Alpha study indicated that independent financial advice has the potential to add a net return of about 3% for clients as a result of ongoing financial and investment advice and, even more importantly, behavioural coaching.
4. Finally, the most recent annual DALBAR study (2018) concluded that stock market investors underperformed the S+P 500 by nearly 3 percentage points per annum over the last 20 years (and more in recent years) due to bad investing habits and poor buy/sell decisions (ie, buying high and selling low).
I have blogged just recently on how investor behaviour can damage portfolio returns – the evidence above bears this out. It’s one of the main reasons why an independent expert voice in your ear can make you a much more successful investor.