A number of studies undertaken by large investment companies such as Vanguard, Morningstar and Russell Investments have aimed to identify any additional ‘alpha’ for members of the public seeking professional financial advice. These studies had landed on different figures but they all indicated an approximation of around 3% of additional returns above the market return each year. Even if this figure was only 2% what would the difference in return for clients be if the market return averaged 5% per annum.
The table below shows the impact of this potential increased return of an initial £300,000 investment over various time periods.
The impact is significant and to paraphrase Albert Einstein, may be compounding advice could be the next wonder of the world (OK – not quite but it’s good to aim high).
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