Financial Planners Chartered

The real value of advice

INVESTING with the help of an expert financial adviser can add an average of three per cent a year to growth, according to recent research – writes DWIFA consultant Stephen Womack.

The world’s biggest mutual fund management group, Vanguard, has concluded that investors who work with a financial adviser typically grow their wealth more quickly than DIY investors.

Vanguard looked at financial markets in North America, Australia and the UK over more than a decade. It concluded that an expert financial adviser can help clients grow their money on average 3% per year faster over the long term, compared with those who invest without advice.

This difference is not only about helping clients to pick the right investments.  The study found that advisers add value in many different ways.  Three key areas where advice boosts returns include:

  • Asset allocation: This involves creating the right mix of different asset classes – such as bonds, equities, cash and property – within a client portfolio. Money is carefully spread across the different areas of investment to produce the highest returns for the level of risk a person is willing to take.
  • Portfolio rebalancing: This reduces overall risk, by regularly selling what has grown the most and reinvesting in other areas to keep the asset mix in on target.
  • Helping clients avoid instinctive ‘behavioural’ pitfalls. Typically these might include selling too quickly if stock markets fall; turning paper losses into real losses and missing out when prices recover

This research strongly echoes the experience of clients at David Williams IFA, Northamptonshire’s biggest firm of Chartered Financial Planners. With 17 advisory staff and a combined 300 years’ worth of experience in financial markets, we have the strength in depth to deliver on the potential of good advice.

Asset allocation is at the heart of our investment process. Regular investment reviews ensure that portfolios are in balance and profits taken from strongly-performing sectors. Maintaining close relations with clients also helps provide reassurance during the inevitable weeks of equity or bond market turbulence.

And while quality financial advice comes at a cost, clients typically find the long term growth they achieve and the tax they save far outweighs the fees they pay.

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