By Rick Kahler via Iris.xyz
How much value does a fiduciary financial planner add to your investment portfolio each year? Four percent, according to Russell Investments’ 2017 update to the firm’s annual “value of an advisor” analysis.
If you do the math quickly, that seems like an incredible deal. Since most financial planners charge a starting fee of around 1%, earning an extra 4% for that expenditure should be a no-brainer. Why, then, aren’t people lined up outside the doors of financial planners waiting to get a chance to become clients?
Let’s take a closer look.
First, this analysis was done by an investment advisory firm. I’m guessing they were unlikely to fund an analysis that found investment advisors to be a terrible waste of money.
That said, everything in their report is true. It valued five investment functions: rebalancing, behavioral mistakes, investment management, financial planning, and tax planning.
1. Rebalancing. The study found that annual rebalancing—bringing your portfolio back in line with its target asset allocation—adds 0.20%. While that is a seemingly small number, it can add up to a lot over a long period of time
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