The value of financial advice can be hard to quantify and sometimes it isn’t just about doing the right thing, it’s about avoiding doing the wrong thing.
Castle Trust financial adviser Glyn Lewis-Jones says it’s a well-known concept within the industry that advisers do as much good by stopping people from making mistakes as they do by helping them to make good decisions. “The value of an adviser comes in with all of these things. It’s a bit of positive advice here and a bit of negative advice there. It’s about passing on experience,” he says.
A 2019 report by Russell Investments attempts to quantity the value of a typical Kiwi adviser. The report looks holistically at the real value advisers deliver for their clients – from providing knowledge and expertise in building personalised portfolios through to the support they provide when market conditions change as well as the broad range of financial planning services offered such as estate planning, risk planning and wealth management.
By examining the key components of an adviser’s services – annual rebalancing, preventing behavioural mistakes and financial planning, the report estimates the typical Kiwi adviser’s wealth management value proposition amounts to more than five percent value-added per year to their clients. It may be significantly more for clients who would not otherwise have had an investment portfolio were it not for their relationship with a financial adviser.
Glyn says the best analogy he can use to describe the benefit of working with a financial adviser is someone going mountain climbing for the first time.
“You’re not just going to walk out the door and head towards Mount Arthur. You’re going to set a target, find a map, plan your route – and look at some of the potential hazards. If you’re smart, you’ll talk to someone who has been up there before. While you might be climbing this mountain for the first time, we’ve climbed up there a thousand times with different people. That’s what enables us to say ‘go left a bit’ or ‘go around that way’.”
While having decades of experience is certainly beneficial, it isn’t the only criteria you should look for when choosing an adviser, says Glyn – whose website bio describes him as ‘the old wise one!’
“While on the one hand you want an experienced adviser; on the other hand, the experienced adviser is going to retire – and the usual method of retiring is to sell up to an outsider with no knowledge of the clients.
“In our profession few firms have younger advisers working with them – younger advisers who the clients already know, who know the clients and who are almost certainly brighter and more up to date than the old guy who is retiring.”
Castle Trust offers a mix of experience, youth and technical knowledge and the company has two female financial advisers – still a minority in New Zealand. You can read more about our team here.
If you have a financial mountain to climb could use some advice, contact the Castle Trust team for a no-obligation free chat. or call 03 528 4184.
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