Five ways advisors add value

01 May 2020 by National Bank Investments

With broader investment options available, investors are increasingly challenging the traditional approach to advice. Here are five advantages to working with a financial advisor.

A 360⁰ view

The advisors’ objective is to provide a bigpicture view of the complete financial situation of investors, including:

Their financial and life goals
Their financial portrait
Their investor profile

Planning for life Factoring in all this information, advisors can create a personalized financial plan. In fact, they can significantly change the evolution of investors’ savings. According to this study¹:

Investors who benefit from financial advice accumulate
3.9 x more assets
after 15 years than those who have not been advised.

The positive effects of working with an advisor are measurable by the
4th year

In addition, partnering with a trusted advisor allows investors to update their plan through life changes, such as the birth of a child, property acquisition, a marital status or job change. The advisor can also help their family.

Investment guidance

Advisors help investors define the investment mix adapted to their goals, time frame, personal situation and risk tolerance:

Diversification	Most important pillar in portfolio building, diversification involves tapping the potential of different asset classes, such as bonds and equities, which evolve differently. A diversified portfolio is likely to provide a more stable return.
Risk management	How do investments interact? Correlation analysis ensures they won’t respond to market fluctuations in the same way. This results in a more balanced portfolio.

Emotional guidance

When markets are volatile, it’s normal for investors to worry about the impact of fluctuations on their investments. During these challenging times, advisors have the expertise to:

Avoid hasty decisions and stay the course: investors driven by their emotions risk selling assets at a low price, resulting in underperformance over time.
Put economic headlines in perspective: turbulent episodes only last a while—sooner or later, markets will start to rise again.

Moreover, these financial professionals can help investors maintain their investment discipline, a key factor in the growth of their wealth.

Holistic approach

Several advisors partner with other professionals, such as CPAs, estate planning attorneys, legal experts, insurance brokers or tax specialists.

By favouring a holistic wealth management approach, they can better coordinate investors’ financial plans and needs. They also offer a level of service that digital investment platforms can’t replicate.

“Price is what you pay. Value is what you get.”
Warren Buffett, U.S. investor, billionaire and financial guru

Long-term investment

When it comes to advice, investors can draw inspiration from Warren Buffet’s famous quote. The fees they pay to benefit from expert advice are an investment in their future to achieve their long-term goals. They help investors grow their wealth and get peace of mind regardless of market conditions.

Legal notes

_{1. Claude Montmarquette and Nathalie Viennot-Briot (2016). The Gamma Factor and the Value of Financial Advice,scientific journal, 2016s-35, Centre for Interuniversity Research and Analysis of Organizations (CIRANO).Montmarquette, C. and N. Viennot-Briot (2019). The Gamma Factor and the Value of Financial Advice. Annals of Economicsand Finance, volume 20, issue 1, pp. 387–411.}

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