Russell Investments study shows financial advisors add more value than the 1% typically charged, calculates 2020 value-add as 2.88%
Firm offers online resources to help investors navigate COVID-19 market turbulence
Toronto, May 6, 2020 —Russell Investments Canada Limited (Russell Investments) has released its fifth-annual Value of an Advisor study, which aims to quantify their ongoing work to serve clients. The 2020 study found the value added by an advisor who delivers comprehensive wealth management is 2.88%.
“We believe advisors have never been more valuable than in the midst of COVID-19-related market turbulence and economic hardships,” said Brad Jung, head of North America Advisor & Intermediary Solutions. “Our annual study holistically analyzes the real value that advisors deliver to their clients in their portfolios and outcomes, as well in helping investors avoid behavioral mistakes, especially during times of market distress.”
Jung added that while dedicated advisors are confronting the challenges as volatility batters many investors’ savings, they need to articulate the value they deliver goes far beyond selecting and managing investments.
Russell Investments developed the following formula based on research and practice to help advisors understand and communicate the full value of their services: A+B+C+P+T = value of an advisor. The formula, which concludes Canadian advisors generally add 2.88% in value is calculated as follows:
- A is for annual rebalancing of investment portfolios. Value-add: 0.1%
- B is for behavioral mistakes often made by individual investors. Value-add: 1%
- C is for cost of basic investment-only management. Value-add: 0.4%
- P is for planning costs and ancillary services. Value-add: 0.72%
- T is for tax-smart planning and investing. Value-add: 0.66%
“The data show the combined value-add of 2.88% is much greater than the typical advisory fee of 1%,” Jung said.
Each value-add component is clearly quantified and explained in an e-kit for investors: "Why work with a financial advisor?”
Russell Investments also offers investors an online Managing through Volatility resource, which features educational material on investing in volatile times. Research-based insights include a chart depicting the “Market Cycle of Emotions” and posts on the impact of staying invested during market turmoil.
“We want to support effective advisor-client conversations that feature clear perspectives on global markets, confidence in their investment process and their portfolio, and mutual clarity on their most important priorities, which may have shifted amid recent volatility,” said Sophie Gilbert, head of Business Solutions for Russell Investments’ North America Advisor and Intermediary Solutions business.
Gilbert added that Russell Investments works with advisors to showcase their value, for example, through effective client conversations that feature the following three key ingredients:
- Perspective: Help their clients gain perspective on world news, market headlines and the value of working with an advisor.
- Process: Help advisors more effectively present their client-centered wealth management process to their clients, as well as their plan for the client and the client’s portfolios.
- Poise: Help advisors speak to their clients with intentional words and authentically ask, listen and empathize throughout their meetings with clients.
“We want advisors to know we stand with them during this unprecedented time,” said Gilbert. “With our support advisors can be more equipped to focus on their clients, their teams and their families—and answer the question, Will I be ok?”
About Russell Investments Canada Limited
Russell Investments Canada Limited is a wholly owned subsidiary of Russell Investments Group, Ltd. Established in 1985, Russell Investments Canada Limited has its head office in Toronto.
About Russell Investments
Russell Investments is a leading global investment firm providing tailored solutions and services to institutions and individuals through financial intermediaries. Russell Investments is dedicated to improving people’s financial security, leveraging an 83-year client-centric heritage rooted in investment innovation. The firm is the fourth-largest adviser in the world with CAD$384.5 billion in assets under management (as of 3/30/2020) and CAD$3.3 trillion in assets under advisement (as of 12/31/2019) for clients in 32 countries. Headquartered in Seattle, Washington, Russell Investments operates through 21 additional offices in major financial centers such as New York, London, Tokyo and Shanghai.
Steve Claiborne, 206-505-1858, firstname.lastname@example.org