Investments: "The advisor effect" - myth or reality?


Your advisor has a huge impact on your saving habits by encouraging you to invest regularly and helping you take steps to develop this habit.

Christine Tremblay | Desjardins Group

A number of studies confirm* that households that use a financial advisor have, on average, twice as many assets and double the savings rate (8.6% versus 4.3%), compared to other non-advised households. They're also much more optimistic about their future! 

These positive numbers are the result of what we call the "advisor effect," which is explained by 4 key success factors.

1. Get in the habit of saving
The positive results of advised households are largely explained by their saving habits. Your advisor has a huge impact on your saving habits by encouraging you to invest regularly and helping you take steps to develop this habit.

2. Have a comprehensive view
Your personal finance advisor gives a detailed picture of your financial situation, and your short- and long-term objectives. Using this picture and your investor profile, they can offer you an investment strategy that suits your needs. They'll help you with the financial decisions you make on a daily basis and during key moments in your life--all while maintaining an overall perspective. 

3. Stay focused on your objective
Are you worried about financial market fluctuations and are wondering about your investment strategy? With their expertise and ability to keep an emotional distance from a situation, your advisor will reassure you and help you stay focused on your long-term vision to help you optimize your investment returns.

4. Diversify your investments
Your advisor helps you increase the profitability of your investments by allocating assets and selecting securities. Some research has shown that advisors help their clients achieve an annual return of up to 3%* higher than what non-advised investors achieve!

A magic formula?
Of course, there's no magic recipe or guarantee of good results. But it's been proven: Getting financial advice on a regular basis increases your chances of meeting your financial and personal objectives. 

Making use of your advisor's expert advice also means having access to many other non-investment strategy services. Your advisor can:

  • Give you financial advice on minor or major events in your life (e.g., buying a house, going back to school, preparing for retirement).
  • Help you manage your affairs, including taxation.
  • Refer you to different sources of specialized personal finance information. 
  • Help you find strategies to reduce your debts. 
  • Help you draw up and follow a budget.
Perseverance is also associated with how well your investments perform; the longer you make use of financial advice, the more you increase the value of your wealth.

*Jon Cockerline, Ph.D., "New Evidence on the Value of Financial Advice," The Investment Funds Institute of Canada (IFIC), 2012. 

**The Investment Funds Institute of Canada (IFIC), "The 2011 Value of Advice: Report," Data taken from Desjardins's InfoFunds, volume 32, no. 4, spring 2012.

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