This research resonates with findings from other studies, such as Vanguard's Adviser’s Alpha analysis, which also highlights goal setting and behavioural coaching as key adviser contributions. The emphasis on investment picking remains minimal, suggesting that unless advisors are exceptionally skilled, the dividends of stock selection might be negligible or even detrimental, overshadowing substantial benefits elsewhere.
Neil Rogan, head of distribution for Russell Investments in Australia and New Zealand, underscores that while advisers have good intentions when managing clients’ investments, the practice may be more efficiently outsourced. This allows advisers to concentrate on areas where they have the greatest impact on client satisfaction and success.
There's a growing trend among larger advisory groups toward outsourcing investment management to specialised firms. This strategy not only reduces advisers' risks related to investment management but also ensures clients benefit from professionally managed portfolios. For smaller practices, considering such an approach might enhance their value proposition.
While some argue that the index makes a strong case against financial advisers as investment managers, Rogan believes shifting focus to client value areas enhances both compliance and client trust. By leveraging external expertise for investment management, advisers can minimise potential pitfalls and ensure that clients enjoy robust and well-managed portfolios.
Overall, advisers are encouraged to reflect on these findings and consider restructuring their service offerings to emphasise the components that deliver the most value to their clients.
