Are financial advisors worth it?
According to a groundbreaking research study, the answer is a resounding yes. Advised households have approximately twice the level of financial assets as their non-advised counterparts, and this advantage grows over time. Canadians who rely on a financial advisor to guide their financial decisions are wealthier, more confident and better prepared for the financial implications of marriage, a new child, their children’s education, retirement and other life events.
The study, carried out by the Montréal-based Center for Interuniversity Research and Analysis on Organizations (CIRANO), shows that advisors positively affect the level of wealth of Canadian households. Professor Claude Montmarquette and Nathalie Viennot Briot used econometric modelling techniques on a very robust sample of Canadian households. Their analysis showed that financial advisors contribute significantly to the accumulation of financial wealth. After controlling for a host of socio-economic, demographic, and attitudinal variables that can affect wealth, the research indicates that the advice advantage is largely attributed to a greater savings discipline.
The CIRANO research further shows that having advice positively impacts retirement readiness and is an important contributor to levels of trust, satisfaction and confidence in financial advisors, which are strong indicators of the value of advice.
Source: An econometric analysis of the value of advice in Canada, by Claude Montmarquette, CIRANO, 2012