Vanguard introduces a framework for measuring the value of financial advice, arguing it extends beyond portfolio returns into financial outcomes and emotional benefits. The paper suggests nearly half the perceived value comes from trust and behavioral coaching, not performance, challenging how investors typically evaluate advisors.
Assessing The Value of Advice
Vanguard
Cynthia Pagliaro, Stephen Utkus
Research
12 Pages
Key Takeaways
Portfolio Behavior Changes: Advice altered equity exposure for about 66% of investors, reduced cash holdings for 28%, and shifted international allocations for 90%, improving diversification outcomes.
Retirement Success Probability: Around 80% of advised clients had at least an 80% probability of meeting retirement goals, while 20% faced shortfalls despite planning.
Emotional Value Component: Emotional factors like trust and guidance accounted for 45% of perceived value, compared to 55% from portfolio management and planning services.
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