Why is Professional Financial Advice Essential?
Professional advice is different.
Professional recommendations are made as a result of in-depth knowledge of the subject matter, while adhering to specific standards that protect client interests.
Professionals are experts in their fields. The recommendations have consequences for the advice-giver and the advice-taker and must reflect insight and prudence. That’s why they’re subject to regulatory scrutiny.
Be cautious when accepting recommendations from non-professionals. Sometimes they’re based on real experience and knowledge, but often they’re just personal options.
Is Advice Worth the cost?
While fees, sales charges and communications continue to be scrutinized, the benefits of advice are well observed.
Advice Households Are Better Off
According to the Centre for Interuniversity Research and Analysis on Organizations (CIRANO), “an advised household that has worked with a financial advisor for four to six years has 58% (or 1.58 times) more assets than passive non-advised households that are identical in all other respects”. The positive correlation is amplified the longer the relationship lasts, as illustrated in the chart.
Know the Facts
- According to CIRANO research, the increased assets of advised vs. non-advised households cannot be explained by asset allocation alone. Advice makes a difference.
- When working with with an advisor, clients benefit from greater savings discipline, in fact, they have been shown to save at twice the rate of non-advised households.
- More than 56% of households who identified working with an advisor feel confident that they will have enough savings to meet their retirement goals; this is compared to 41% of those who have no advice relationship.