The Vanguard report, The Emotional and Time Value of Advice, pointed to the fact that in fulfilling their role, many advisers might be inadvertently giving emotional benefits to clients, acting as a trusted voice to help navigate the complexities of their financial lives.
Surveying 12,443 Vanguard investors (62 per cent of which had also been advised by Vanguard) found that in-person advice had the greater impact on clients, with 71 per cent stating they felt more peace of mind and positive emotions when being advised by a human. In contrast, 47 per cent reported the same level of emotional satisfaction when seeking advice digitally.
“Human-advised clients are more likely to report improvements in their emotions, consistent with previous research,” researcher Paulo Costa said.
“What’s somewhat surprising is how digital advice does well in helping clients not feel anxious or ashamed when interacting with the service. For example, 85 per cent of digitally advised clients report not feeling ashamed when using digital advice.”
Self-directed clients surveyed also reported higher levels of stress, with 68 per cent reporting medium to high levels of stress, compared with 50 per cent of advised clients.
The survey found that advised investors spent an average of 30 minutes less across a week on their finances (3.8 hours versus 4.3). Three-quarters (76 per cent) of advised clients stated advice had saved them time, with that number improving to 86 per cent when focusing on clients who had been advised in person.
“On average, advice reduces distractions by almost two hours per week, translating into potential productivity savings of $2,200 to $5,850 per year,” the report stated.
According to Vanguard, this survey “demonstrates that financial advice offers significant value beyond traditional portfolio construction and financial planning”, also highlighting that for many investors and their financial advisers, this has not been fully recognised. Vanguard suggested that advisers should use this information to educate clients and investors about the benefits of their services beyond simply improving their bottom line.
“Understanding how financial advice saves clients’ time is important,” said Marsella Martino, investment strategy analyst at Vanguard.
Martino added: “The peace of mind and time savings that clients experience should be integral metrics when evaluating the value of financial advice.”
Indeed, just 38 per cent of clients noted time value as among their initial reasons for signing up for financial advice – however, 76 per cent reported experiencing time savings after working with an adviser.
