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Wealth Professional | 25 Jun 2015, 09:00 AM Agree 0
Everyone beats the drum on best practices, but what is the value in following those to the letter? If you ask one investment management company, it can add 3 per cent in net returns for the client.
  • Wealth Advisor | 25 Jun 2015, 11:23 AM Agree 0
    Great article.

    I've probably looked at and seen more studies than most advisors and after a while you tend to get a bit cynical about just another study.

    Generally, you see two camps: pro-advisor or anti-advisor or active vs. passive.

    This particular one though caught my eye -specifically the source: Incredibly, it's Vanguard. -the great grand-daddy of low-cost passive investing.

    They are saying that advisors today, using current commission structures are adding 3% per year net!

    Another Morningstar study came to a similar conclusion - advisors do add gamma.

    But this study is the first one where two different sets of clients are buying the same fund(s). DIY vs. advisor which is more of apples-to-apples and oranges-to-oranges direct comparison that I've not seen before.

    It is interesting to note that behavioral coaching is the most important factor of all; something passivists completely deny - me? selling at the bottom -never! Underperforming my own index investment -won't happen!

    Still, I am a bit cynical though, as Vanguard is obviously appealing to the low-cost DIY crowd and the advisor community at the same time.

    How Vanguard will market this study to their own DIY investors will be interesting. Now that will be an interesting conflict of interest!
  • Robert Roby | 25 Jun 2015, 05:09 PM Agree 0
    I agree "Wealth Advisor". One report that is or was interesting is the IFIC report which was conducted by an unbiased source which clearly demonstrates advisor value. Keep in mind there are those who see little value in anything.
  • Barb Amsden | 26 Jun 2015, 11:32 AM Agree 0
    The number one (in my view) benefit of an advisor doing his or her job right isn't explicitly listed here - tax-effectiveness. This is not just picking RRSP vs TFSA but putting the right investment in open versus registered plan. Federal Department of Finance says tax efficiency adds 1.5% in returns. I believe that is just looking at using RDSP, RESP, RRSP, HBP/LLL and TFSA. I don't often believe government numbers (as Mark Twain said, :lies, damn lies, and statistics), but I think it reasonable.
  • robert roby | 26 Jun 2015, 02:08 PM Agree 0

    Tax planning is one of the spokes in adding value to a client. There are many capable tax planners out there. Value in my opinion is what we do for clients when no one looking. Be it providing cleaning services for older clients; visitations to nursing homes, family council meetings to iron out family issues and more. True value is not based on investments or tax planning but on providing clients a life's purpose and a passion or passions so that the money they do have is spent on a life well lived. Hopefully more advisors will aspire to this type of thinking over time.
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