Skip to main content

Measuring the Value of a Financial Advisor

What is a relationship with a financial advisor worth to an investor? A 2019 study by Vanguard, one of the world’s largest money managers, attempts to answer that question.

Vanguard’s whitepaper concludes that when an investor worked with an advisor and received professional investment advice, they saw a net portfolio return about 3% higher over time.[i]

How did this study arrive at that conclusion?

By comparing self-directed investor accounts to an advisor model, Vanguard found that the potential return relative to the average investor experience was higher for individuals who had financial advisors.1

Vanguard analyzed three key services that an advisor may provide: portfolio construction, wealth management, and behavioral coaching. It estimated that portfolio construction advice (e.g., asset allocation, asset location) could have added up to 1.2% in additional return, while wealth management (e.g., rebalancing, drawdown strategies) may have contributed over 1% in additional return.1

The biggest opportunity to add value was in behavioral coaching, which was estimated to be worth about 1.5% in additional return. Financial advisors can use their insight to guide clients away from poor decisions, such as panic selling or accepting excessive risk in a portfolio. Indeed, the greatest value of a financial advisor may be in helping individuals adhere to an agreed-upon financial and investment strategy.1

Of course, financial advisors can account for additional value not studied by Vanguard, such as helping clients implement wealth protection strategies, which protect against the financial consequences of loss of income and coordinating with other financial professionals on tax management and estate strategies.

After years of working with a financial advisor, the value of a relationship may be measured in both tangible and intangible ways. Many such investors are grateful they are not “going it alone.”

Past performance does not guarantee future results. This study provided feedback and estimates based on customer experience. The value of advice is not a guarantee of performance. Actual returns will fluctuate.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences. This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be


[i] https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf

Market Commentary & Coronavirus Thoughts

Marshall Bolden, CFA®, President

March 2, 2020

Given the sharp increase in market volatility and the stock market declines over the past several days, many clients have understandably been concerned. While we cannot predict what the markets will do moving forward, we do want to provide some thoughts and commentary regarding the current situation.

Markets hate uncertainty, and there is currently a lot of uncertainty around the spread of coronavirus and how this will impact economic growth rates and corporate earnings. As the virus has moved outside China and established outbreaks in other countries, fear and uncertainty have grown. This is coming at a time when equity valuations, particularly in the U.S., were higher than average. This combination of factors has led to sharp pullbacks in the equity markets. From its closing level on February 19, the S&P 500 Index declined nearly 13% through February 28. The last week was the worst week for many equity markets since the 2008/2009 financial crisis.

It is too early to speak with any certainty regarding the ultimate reach of the virus and how this will affect various economies. We do expect volatility to remain elevated in the short term as the reach of the virus continues to expand and as various governments, agencies, and industries react to this. However, this does not necessarily mean the equity markets will continue to decline steeply. As already mentioned, the short-term market movements are a guessing game, but we do have historical data related to previous periods when pandemics occurred. JP Morgan Asset Management has reviewed S&P 500 returns related to the SARS, swine flu (H1N1), bird flu (H7N9), Ebola & MERS outbreaks. This data shows an average max drawdown of less than 10%, that one month after the outbreaks the average return is nearly flat, and that 6 months after the outbreaks the average return has been above 10%. In other words, the drawdowns or market declines in similar past events have not been prolonged events, and the S&P 500 has normally been higher 6 months after an outbreak than it was at the beginning.

Volatility and market declines inevitably cause emotions to increase. The urge to sell, reduce risk, or generally take action rises. Behavioral finance has told us this for years. There is also plenty of actual, historical data that points to the impact of quick, emotions-based decisions. Outcomes of such decisions are often detrimental to investor’s returns and probability of reaching their long-term goals. This makes sense. Our emotions normally scream to sell or reduce risk when the markets begin to fall, and once the markets have been up a while and/or are more stable, they tell us to get back in or to increase risk. Doing this often results in selling low & buying high…the exact opposite of the investment idiom that says to buy low & sell high. The reality of investing is that very few, if any, people can accurately and consistently predict short term market movements. Therefore, we will continue to stress long-term investing and for investments and risk level to be determined in light of a long-term plan. This linked video commentary by Kara Murphy provides further insight regarding recent market events and the importance of investing within the context of a long-term plan. Kara is the Chief Investment Officer

Investment advisory services offered through CapSouth Partners, Inc., an independent Registered Investment Advisor, dba CapSouth Wealth Management. CapSouth Partners does not provide tax or legal advice. Please consult your tax or legal advisor prior to making decisions which may have tax or legal consequences. Past performance is no guarantee of future results. Information contained herein is believed to be reliable but is not guaranteed as such by CapSouth. Nothing contained herein should be construed as individual investment advice; all commentary is of a general nature. This commentary contains opinions; any opinions presented should not be construed as fact and are not in any way a guarantee of future events.

We Are Hiring: Financial Relationship Manager “Advisor Assistant”

 

The following position description contains representative examples of work that will be performed in positions allocated to this classification. It is not required that any position perform all the duties listed, so long as primary responsibilities are consistent with the work as described. Roles and responsibilities can often be expanded to accommodate changing business conditions and goals, as well as to tap into the skills and talents of the individuals in the company. Accordingly, associates may be asked to perform duties that are outside the specific functions that are listed.

Please include a cover letter stating why you would be a good fit for this position and for CapSouth Wealth Management. Also, please describe your three most defining characteristics and attributes.

 

CapSouth Wealth Management is a growing Wealth Management company in Dothan, Alabama, with offices in 2 other states, and actively looking to expand.  We are currently looking for an individual who gets excited about taking on challenges and can multitask in a high-demand and fast-paced environment.  The right individual will also embody our core values and thrive on working with a team.  We offer competitive pay, great benefits, and potential for growth.

 

  1. MISSION

The Financial Relationship Manager “Advisor Assistant” acts as the primary point of contact for assigned clients. This individual is responsible for the management and monitoring of the client relationship, ensuring a consistent positive client experience, including working with the team to ensure all commitments are completed and followed through in a timely manner.  This position requires a pro-active approach and ability to independently carry out the duties of the position. The ideal candidate should exhibit high standards, excellent communication skills, good judgment, and ability to take initiative. The ability to effectively manage time and multi-task with attention to detail is critical to this role.  The term Advisor is used in referring to a Managing Director, Senior Wealth Advisor or Wealth Advisor.

 

  1. ESSENTIAL RESPONSIBILITIES
  • Actively participate in all assigned Advisor client meetings
  • Demonstrate the ability to escalate potential client issues to Advisor as appropriate
  • Actively document all notes and action items during client meetings and ensure all commitments made by the Advisor are being completed in a timely manner (this may include personally completing task or assigning task to other team members for completion)
  • Review task assignments for each client and work directly with team members to ensure all follow-up and action items as a result of client meetings are documented in Salesforce and completed within the specified time frame
  • Under the direct oversight of the Advisor, actively engage in Client Case Prep meetings and providing recommendations and feedback relative to the client’s financial plan, as appropriate
  • Responsible for maintaining an ongoing agenda for the next meeting immediately following completion of the current meeting (this agenda should be modified with new information as developed and finalized several days in advance of the next meeting)
  • Create, or assist in creating, presentations, case documentation, and deliverables for all assigned clients
  • Ensure compliance requirements are adhered to
  • Be responsible for the onboarding process for new clients, ensuring all guidelines are adhered to throughout the process
  • Act as the primary point of contact for all client interactions, working with team members to ensure a timely response to all client questions and concerns
  • Establish and maintain positive relationships with existing clients to ensure client satisfaction
  • Constantly seek for ways to improve operations

 

III. POSITION SPECIFICATIONS

Experience and Education:

  • A Bachelor’s degree is preferred
  • Prefer 3-5 years working in a Client Service
  • Some knowledge of financial industry preferred
  • Willingness to pursue Series 65 license

 

Skills and Knowledge:

  • Demonstrates analytical ability, good judgment, problem solving, responsibility, personal integrity, and able to deal with confidential information daily
  • A self-starter with a strong sense of ownership, positive professional attitude, and demeanor
  • Must be able to exercise judgment, tact, and diplomacy on behalf of supervisors when dealing with other executives and levels of management
  • Proficient in Microsoft Office (Word, PowerPoint, Excel, Outlook).
  • Experience in Salesforce highly desired
  • Excellent customer service
  • Professional and articulate with strong attention to detail and excellent oral and written communication skills
  • Ability to work efficiently, effectively, and independently to see projects through to conclusion
  • Excellent time management, organizational skills, and ability to prioritize multiple tasks and anticipate potential problems

 

Core Competencies:

  • Comprehends the extreme confidential nature of the business and exhibits extreme care in handling confidential information
  • Evaluates and assess timely completion of client deliverables, allocation of internal resources, and client liaison
  • Able to interpret and disseminate information, prepare reports, and use of the appropriate mode of communication
  • Orientated to provide excellent Customer / Client service
  • Computer literate – comfortable with technology and the use of standard office programs and networks

 

Benefits include:

  • Off every Friday at 1 pm
  • 401k plan with match, non-elective contribution, and potential for profit-sharing contributions
  • 10.5 annual holidays
  • Paid time off starting at 8 days the first year, increasing to 13 days in year two
  • Great medical benefits (partially subsidized by the company), along with the option to add a supplemental medical coverage, dental, vision, long-term disability, life, and voluntary life

 

Help us keep you informed!

Let us do the work and keep you updated! Sign up for the CapSouth financial updates.

You have Successfully Subscribed!