Introducing Adviser's Alpha
08 December 2014 | Nick Blake
Have you ever wished you could put an actual value on the value you add for your clients? If you have, I've got some good news for you.
We've recently launched our Adviser's Alpha programme in the UK. It's a programme that our US colleagues have been using to help advisers in the States for more than ten years and we're excited about bringing it to the UK.
We define Adviser's Alpha as the difference between the return that an investor might achieve with an adviser's help and what they might have achieved on their own. For the first time, we've tried to put a numerical value on that difference in the UK. It comes out at about 3% per annum.
Perhaps more importantly, we've identified seven components of that added value:
- Setting a suitable asset allocation
- Regular rebalancing
- Minimising costs
- Behavioural coaching
- Making the most of tax allowances
- Spending strategy
- Total-return versus income investing
The relative importance of these seven elements will be different for each of your clients, of course. But keeping these elements in mind gives you a really good framework for assessing how you go about creating value for your clients. And the good news is that they're all things you can control.
I'll be exploring these seven elements further in future posts and we'll be rolling out some tools to help you maximise your own Adviser's Alpha over the next few months. In the meantime, if you'd like to know more about how that 3% breaks down, take a look at our adviser brief.
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