Time to Read Summary3 minutes  |

Over the past two decades, the advent of low cost brokerages with online trading have rendered traditional stock brokers obsolete. In addition, most professional investment managers don’t consistently beat their benchmark after fees. Many affluent families have come to view the cost of financial advice as an investment itself. They rightfully question the wisdom of paying high commissions to money managers who often erode, rather than create, value.

Contemporaneously, academic researchers, wealth managers, and some investment firms have worked to identify areas of focus where astute investors do realize genuine returns on the price they pay for experienced professional financial advice:

  1. Investment Management – Managing costs, taxes, and risks, efficient asset allocation, asset location strategies, and rebalancing.
  2. Behavior Management – Overcoming cognitive and emotional biases which can erode wealth.
  3. Planning/Organization – Holistic advice on retirement, tax, estate, charitable giving, cash management, healthcare, executive compensation, Social Security, asset protection, etc.

While these benefits are often intangible and difficult to quantify, The Vanguard Group, a well-respected early champion for low cost index investments, has done excellent work on this front.

The firm estimates a total potential value added of 3% per year for families receiving these critical services from their wealth management team.

Our philosophy at BWM Financial has always closely aligned with Vanguard’s mission to maximize value for clients. Perhaps you’re paying top dollar for the wrong financial advice. Or, you may be without professional help to avoid the associated costs. Either way, the attached Vanguard report is a must read for high-net-worth families considering an investment in wealth management advice.

Click here to access the full Vanguard report – Putting a value on your value: Quantifying Vanguard Advisor’s Alpha®