Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 222

What do investors value in financial advice?

Challenged on one front by robots and on the other by a general reluctance among the wider public to pay for advice, some financial planners have been experiencing an existential crisis in recent years.

One obvious response among advice firms has been to fight the technology-led commodification of advice by going for scale, cutting costs and industrialising processes as much as feasible. A second response has been for advisers to stop and ask themselves exactly what it is that investors (or at least those willing to pay for financial advice) feel they value most from the human side of the service. A third response, and one pursued in a new global survey, is to ask investors themselves what they value.

The survey of almost 19,000 investors (clients of 436 participating firms in eight countries) by Dimensional Fund Advisers offers insights for firms reflecting on what they can offer and charge for beyond what’s available in an app.

Investment returns rank below security and peace of mind

The most notable outcome of the survey, which covered Australia, New Zealand, the US, Canada, the UK and Europe, was that investment returns rank well below other more qualitative factors for end investors. Asked how they primarily measure the value they receive from their adviser, investors’ most cited benefit was a sense of security and peace of mind, which was the top value among 35% of respondents. Second on the list was the adviser’s knowledge of their personal financial situation (23%), followed by a sense of making progress toward their goals (20%). Investment returns came in fourth among the key benefits at 14%. While all this might seem predictable at first glance, it’s arguable whether many financial planning firms really position themselves primarily in that light, as wealth counsellors and behavioural mentors.

While advisors may be tempted to promote their value as ‘generating good returns’, the real value they offer is getting clients to where they want to go. Returns are part of that, of course, but the advisor’s main value-add is keeping clients focused on the areas within their control. Promising ‘good returns’ only means having to explain when markets don’t deliver.

For instance, a financial plan that involves taking big risks in volatile assets whose ups and downs are more than the client can comfortably live with is probably not going to be a successful plan in delivering on the goal. In contrast, a plan that works within the clients’ risk preferences that allows them to sleep at night and that is built according to their own lifestyle and circumstances may be more successful, even if short-term returns are less eye-catching.

In other words, the destination is more achievable if the journey is tolerable. And that’s the value proposition for advisers that surfaced in this survey.

What can be controlled?

According to Dimensional’s co-CEO and Head of Global Financial Adviser Services, Dave Butler, the value that investors place on a sense of security is really an outcome of advisers setting the right expectations with each client. “By helping clients understand what they can and cannot control, advisers can create a different experience to help ease their concerns,” Butler says. The importance of the day-to-day experience also came through in answers to the question about what attribute investors consider most important in the adviser relationship. Of the survey sample, 31% cited the client service experience, while 26% said they ranked the adviser’s experience with clients like themselves.

With Australia’s superannuation system moving away from a lump sum to a retirement income goal, the survey’s findings were revealing. Asked to identify the most valuable retirement planning information they receive, 28% of respondents cited knowing how much they will be able to afford to spend each year, ranking ahead of the total amount they will have for retirement (22%). Correspondingly, the single most cited fear about personal finances was not having enough to live on comfortably in retirement (37%), followed by experiencing a significant loss in a market downturn (31%).

 

Jim Parker is Regional Director, Communications, for Dimensional Fund Advisors in Sydney. Dimensional has 12 offices in eight countries and global assets under management of AUD675 billion as at 30 June 2017.

 

  •   12 October 2017
  • 1
  •      
  •   

RELATED ARTICLES

Super is catching up, but ageing is a triple-threat

Work still needed to close the financial gender gap

The link between financial and mental health

banner

Most viewed in recent weeks

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Latest Updates

Shares

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

Investment strategies

Making a case for the 40 year mortgage

The housing debate tends to focus on prices, interest rates and deposits. Yet an overlooked feature of the mortgage itself could help buyers enter the market sooner without abandoning prudent lending standards.

SMSF strategies

Red flags to watch out for when considering an SMSF

Thinking about an SMSF? Before you sign anything, learn how to spot the difference between genuine advice and a sales pitch, understand the real costs, and avoid the compliance mistakes that attract ATO attention.

Investment strategies

Not all income is created equal

Market conditions are shifting as familiar yield sources quietly lose momentum. Australian public credit may be the most compelling source of income in today's market but many investors haven't noticed the shift. 

Investment strategies

The market paid for change, not comfort

Reporting season has delivered a clear message: the market is no longer paying simply for quality, resilience or an earnings beat. It is paying for change in earnings expectations and the outlook ahead. 

Investment strategies

Will AI destroy investor capital?

Some of history's most important innovations changed the world while leaving investors much poorer. As trillions pour into AI, a familiar pattern may be emerging, one that rewards society far more generously than capital.

ASX reporting season: Signals, surprises, stock stories

August reporting season delivered strong earnings and bigger-than-expected dividends, but beneath this, a more nuanced story emerged. First Sentier Investors’ David Wilson and Christian Guerra unpack the key trends.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.