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Introducing Adviser's Alpha

08 December 2014 | Nick Blake

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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:

  1. Setting a suitable asset allocation
  2. Regular rebalancing
  3. Minimising costs
  4. Behavioural coaching
  5. Making the most of tax allowances
  6. Spending strategy
  7. 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.

 

Important information

This information is directed at professional investors and should not be distributed to, or relied upon by retail investors.

This information is designed for use by, and is directed only at persons resident in the UK.

The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so.

The information in this article does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this article when making any investment decisions.

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

The opinions expressed in this article are those of individual author and may not be representative of Vanguard Asset Management, Limited.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

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