The value that expert advice can have on your financial portfolio
During my first few years as a branch manager in the insurance industry, I was asked by our Head Office to go and meet with a disgruntled farmer who laid a complaint. The farmer was not happy with the product that the broker had sold to him. After the “koek & tee” formalities – he climbed into me about how poor this particular product was. However, this product was seen as a market leader at the time and very popular with many other clients. The best analogy I could use to explain that it was not the product but rather the advice – was by saying: “If a shoe salesman sold you the best pair of gumboots in the world, but your objective is to run the Comrades, even an average pair of tekkies would be a better buy.”
Customers should be careful of making buying decisions based on product features only, first get the correct advice for your personal needs and objectives and then find the best product to fit those needs.
- The “Value of an Advisor” study by Russell Investments in 2021 shows that advisors delivering services and good quality advice have an estimated contributory value of 4.83% to client’s investment returns.
- This study is backed up by research conducted at RBC Global Asset Management Inc. over a 15-year period. The research showed that investors who worked with an advisor had almost 4 times the assets of investors who didn’t work with an advisor.
- Advised clients are often more successful at saving, with 80% of investors saying that their advisor helped them save. This is according to the Canadian Investors’ Perceptions of Mutual Funds and the Mutual Fund Industry in 2019.
- Ryan O. Murphy, PH. D claims that investors underestimated the importance of behavioural coaching from advisors, especially when it comes to helping them stay on course with their financial objectives.
However, it is not only for investments where a financial advisor plays a valuable role. Life insurance seems straightforward enough on the surface; a policyholder makes premium payments so that beneficiaries will receive a lump-sum benefit upon the policyholder’s death, thereby ensuring family and other heirs will be taken care of. The situation is complicated by the different types of life insurance (term or whole of life?), premium patterns (age rated or level?) and other terms like future protector & policy protection. Clients should understand that life insurance needs will change over time, and so will the insurance products that may be beneficial to you.
Clients should work with an advisor who upholds the FSCA standards, meaning they are obligated to put their clients’ interests ahead of their own. IWCP is a premier provider of insurance and wealth creation products. We can help you create a customized financial plan so that you can rest easy knowing your family is protected and your future is secure. Our goal is to provide the highest level of service and expertise while maintaining our commitment to integrity, professionalism and trustworthiness.
Author:
Chris Oosthuisen – Managing Director of the IWCP Group.
