Is Hiring a Financial Adviser Worth The Cost?
It’s a question we hear time and time again: “Is professional financial advice really worth the cost?”
With investment platforms, podcasts, financial influencers and AI making financial information more accessible than ever, it’s understandable why some people may choose to manage their money themselves.
But access to information doesn’t always translate to better returns.
Fortunately, we don’t need to rely on opinions. A growing body of research from respected investment firms and independent organisations has examined the value financial advisers provide, and the findings speak for themselves.
Vanguard
Investment giant Vanguard has spent years researching the value financial advisers provide to clients.
But rather than just claiming advisers outperform the market, they found that the biggest benefits come from a combination of behavioural coaching, tax strategies, disciplined portfolio management, strategic asset allocation and retirement planning.
Vanguard demonstrated that using a financial adviser adds around 3% in net value each year. While this percentage may seem modest, over years or decades, it can compound into tens or even hundreds of thousands of dollars.
Much of this value actually comes from helping clients make better financial decisions during periods of uncertainty, rather than just trying to “beat the market” (spoiler alert: not gonna happen).
Beyond just investing, further research from Vanguard found that the value of financial advice doesn’t just stop once you’ve built your wealth. A carefully planned retirement withdrawal strategy can also:
- Reduce the amount of tax you pay over your lifetime
- Help your portfolio last longer
- Increase your retirement income
- Lower the risk of outliving your savings.
Russell Investments
Russell Investments reached a very similar conclusion in their Value of an Advisor study.
Their research estimated that a quality financial adviser can add upwards of 3.52% of value per year, through areas such as:
- Strategic asset allocation
- Tax management
- Behavioural coaching
- Withdrawal strategies
- Ongoing portfolio monitoring
- Financial planning
Their findings reinforce that advice isn’t just about investments, it’s about making smarter financial decisions at every stage of life.
Retirement Income Institute
A common misconception is that achieving higher returns requires taking significantly greater investment risk.
A study from The Retirement Income Institute actually found otherwise, demonstrating that investors who used financial planners achieved stronger portfolio performance than self-directed investors, while still taking similar levels of investment risk.
Their research found that professional financial advice wasn’t just encouraging clients to take bigger risks, it was actually helping them invest even more effectively.
In short, the value of advice doesn’t simply lie in increasing risk and pursuing higher returns, but by improving the quality of financial decisions.
Centre for Economic Policy Research
Research from the Centre for Economic Policy Research examined how investors behave when managing their own money versus working with professional advisers.
They discovered that investors who engaged a financial adviser to assist with their financial planning experienced:
- Better portfolio diversification
- Lower overall investment risk
- A reduced likelihood of suffering significant investment losses
Their research demonstrates that avoiding large losses is just as valuable as chasing higher returns and proving once again the value of a professional financial adviser.
Morningstar
One of the biggest challenges investors face isn’t choosing investments, it’s managing their emotions and behaviour toward investing and money.
Morningstar’s infamous Mind The Gap study found that between 2013 and 2022, investors earned 1.7% less per year than the investments they actually owned.
Why? Because too many investors attempted to:
- Buy after markets had already risen
- Sell during downturns
- Move in and out of investments based on fear or excitement
This emotional behaviour quietly erodes long term investment returns.
Morningstar looked beyond just investment returns alone. Instead, they measured the value created through smart financial planning and the result was remarkable.
Professional financial advice was found to increase a retiree’s sustainable retirement income by nearly 30%.
A financial adviser doesn’t just tell you what to buy and when, they provide discipline and perspective during volatile markets. The right adviser helps you stay focused on your long term strategy, rather than reacting emotionally to fleeting headlines.
So, Is Hiring a Financial Adviser Worth The Cost?
You tell us.
Across multiple independent studies, one message is consistent: Quality financial advice provides significant long term value.
A good financial adviser isn’t simply trying to pick winning shares, guarantee investment returns or predict markets. What they can do is help you build a strong strategy, make more informed decisions, stay disciplined, plan for retirement and avoid costly mistakes.
Financial advice isn’t just about growing your wealth, it’s about helping you make better financial decisions with confidence, so you can focus on living the life you want, while knowing your financial future is building in the background.
At BISCosgrove, we believe good financial advice starts with understanding your goals, your circumstances and what’s important to you. Get in touch with us today and let our team of expert advisers put your mind at ease.
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The material and contents provided in this publication are general and informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
