If your clients ever want to know why paying your fees are worth it to them… Vanguard Mutual Funds gave you the ultimate proof. A report by Vanguard called “Putting a Value on Your Value: Quantifying Vanguard Advisors Alpha” makes the case that people working with advisors will make an additional 3.75%! Thank you Vanguard! It makes us look like a steal to the client.
The paper illustrates that the advice of a competent advisor increases an investor’s return by:
- Making clients “stick to the plan” an advisor will, on average, add an additional 1.5% annually to a client’s return.
- Appropriately distributing a client’s assets between taxable and tax-protected vehicles can add an additional 0.75% a year to a portfolio’s return.
- Paying attention to product fees can add another 0.45% to the return.
- Regularly re-balancing a client’s portfolio adds another 0.35% annually.
- Laying out a well thought out income (spend-down) plan can potentially add another 0.7% to the annual return.
Add those up and you get 3.75%. So any fee we charge seems like a steal in comparison!
