Quantifying Adviser's Alpha® in the UK: Putting a value on your value

In this paper, Quantifying Adviser’s Alpha® in the UK: Putting a value on your value, Vanguard’s Advisory Research Centre recounts the evolution of the Adviser’s Alpha framework since its introduction in the US 25 years ago, to its widespread adoption and expansion in the UK market. The result: A significant transformation in how advisers manage client portfolios and material improvements to clients’ investment outcomes. 
 

• Since its introduction in 2001, Adviser’s Alpha highlights how advisers can generate more substantial and predictable value, or alpha, by focusing on financial planning, behavioural coaching and relationship-oriented services.
  
  
• Prior to that, the primary value proposition for advisers was to try to outperform the market, with indexing and low-cost investing comprising less than 10% of advisory portfolios.
  
  
• The Adviser’s Alpha framework identifies seven key wealth management activities through which advisers can add meaningful value to their clients’ returns.
  
  
• Advisers who follow these best practices can add up to, or even exceed, 3% in net returns1 for their clients while also providing them with a tangible way to differentiate their skills and services. 
  
  
• While financial markets will continue to experience both bull and bear cycles, we believe there will always be a secular bull market for fee-based financial advice from advisers that embrace the value creation activities within the Adviser’s Alpha framework. 
  
  

¹ Like any approximation, the actual amount of value added may vary significantly, depending on a client’s circumstances.