advisor investor trust

Financial advisors earned their keep during a volatile 2022, according to Russell Investments Canada’s 2023 Value of an Advisor study.

Last year, full-service advisors added value of 3.90%, up from 3.85% in 2021. Behavioural coaching efforts once again added the most value, at 195 basis points (up from 193 bps the year prior).

The remainder of the value came from customized client experience and family wealth planning (110 bps, up from 104 bps in 2021), tax planning and tax-efficient investing (68 bps, no change) and active rebalancing of investment portfolios (17 bps, down from 20 bps in 2021).

“2022 was a challenging year for investors, with stocks and bonds both declining, but once again our objective formula reveals advisors continued to provide significant value well beyond the average financial advisor fee,” said Brad Jung, president of Russell Investments Canada Ltd., in a release.

Russell Investments estimated the average fee at 1.5%.

The study illustrated the effects of behavioural coaching by showing the impact of missing the best days in the markets. Someone who invested $100,000 in the S&P/TSX composite index for the 10 years ended Dec. 31, 2022 would have had $210,664.

Meanwhile, someone who missed the 10 best-performing days over that decade would have only finished the period with $128,768, and someone who missed the 30 best-performing days would have finished with $79,983.

The value of advice has been relatively steady since the 2020 calendar year (as reported in 2021), when it was 3.95%. That’s up from 2.88% in 2019 and 2.79% in 2018. The 2023 study is the eighth annual edition.