A D V E R T O R I A L

3 Studies Suggest Potential Value of Financial Advisors

Helping people make smart financial decisions

I N  T H E  P R E S S :

Investors often wonder if it’s worth enlisting the help of a financial advisor. The short answer appears to be “yes,” according to a myriad of studies of consumers who use one.

And considering the recent swings in the financial market, a second opinion can be a priceless safeguard against potentially disastrous emotionally-driven decisions.

The Numbers Indicate the Value

Magnify Money recently surveyed 1,500 adults about why they use -- or don’t use -- a financial advisor.

Check out some of the key findings:¹

• 60% of respondents with a financial advisor hired one after a specific life event
  
• 1 in 5 Gen Zers with an advisor hired one after a death in the family and/or receiving an inheritance
• 22% of Millennials with a financial advisor got one because of a marriage or divorce
• 95% of those with a financial advisor think it’s worth the money
• 61% say they pay less than $3,000 per year for advisor services

In fact, a recent Vanguard study further breaks down the value of a financial advisor's services.

Assuming 5% annualized growth of $500k portfolio vs 8% annualized growth of advisor managed portfolio over 25 years. 

The hypothetical study discussed above assumes a 5% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”.  Please carefully review the methodologies employed in the Vanguard Whitepaper  The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser.

Vanguard found that:²

• On average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years.
• The expected value from self-management of the same hypothetical investment would be $1.69 million – 50% less.

In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.

Of course, the value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research from the Journal of Retirement suggests people

who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.³

Empowering people to make smart financial decisions.

How to Quickly Compare Financial Advisors at No Cost to You

If the current market conditions have you worried about your investment portfolio, and especially your lifestyle in retirement, we recommend speaking with a financial advisor to see how they might be able to help you ease financial stress.

Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.

That’s why we created this quick, no-cost quiz that makes it easy to find a qualified advisor in minutes, so you can make an informed decision and choose the right one for you. You’ll be matched with up to three vetted, fiduciary financial advisors who serve your area and are legally obligated to work in your best interest.

Before this easy-to-use tool, there was no simple way to quickly compare financial advisors. Hundreds of thousands of smart investors and retirees have already used SmartAsset's simple, no-obligation service to compare their financial advisor matches.

The entire matching process takes just a few minutes.

Click Your State to Get Matched With Financial Advisors Who Serve Your Area

After you choose your state and answer a few questions, you can compare up to three advisors that serve your area and decide which to work with.

This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.

SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments.

We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.

Other than application and licensing fees, SmartAsset did not provide compensation for the aforementioned awards.

Sources:
1. Magnify Money. “Half of Consumers Think Financial Advisors Are More Expensive Than They Are, But Almost All Who Use One Say They’re Worth It” (March 2021).
2. Vanguard (Feb. 2019), Putting a Value on Your Value
3. Journal of Retirement Study Winter (2020)

The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the links to see the methodologies employed in the Journal of Retirement and Vanguard studies.

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Vanguard found that:²

• On average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years.
• The expected value from self-management of the same hypothetical investment would be $1.69 million – 50% less.

In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.

Of course, the value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research from the Journal of Retirement suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.³