Nearly half of the value delivered by advisor’s is emotional, according to new research.

Advisors have long maintained that much of their value is delivered outside a client’s investment portfolio, but have lacked clear ways to quantify those impacts they have on client’s lives, according to “Assessing the Value of Advice,” a new paper published today by Vanguard.

“Our results highlight the need for a broader advisory industry investment in value metrics,” wrote the report’s authors. “These metrics will have to extend beyond traditional portfolio outcomes to encompass broader financial goal attainment and emotional well-being.”

Vanguard analyzed the impact of financial advice among more than 100,000 participants in its $140 billion AUM Vanguard Personal Advisor Services, a hybrid robo-advisor that offers live financial planners to clients engaging in digital advice.

Vanguard defined the value of advice along three  dimensions: portfolio, financial and emotional.

Vanguard measured the impact of advice on portfolio outcomes by studying changes in portfolio diversification among 45,000 clients who had switched from self-directed investing to using an advisor. This research revealed that financial advice usually alters the amount of equity risk for two-thirds of investors: 32% of the study participants had their equity allocation increased by 10% or more, while 34% had equity allocations decreased.

Engaging with an advisor changed the allocation to international investments for 90% of the account holders and reduced cash holdings for 28%. In fact, among the study participants, the average percentage of portfolio holdings in cash dropped from 16% to 1% in the year between six months before the adoption of face-to-face financial advice and six months afterwards.

Single-stock risk was “effectively eliminated” for the 10% of investors who had significant positions in single stocks, and about 80% of investors saw an increased allocation to portfolios based on index funds, substantially reducing their investment costs.

For financial outcomes, Vanguard examined whether 105,000 investors who had established a retirement goal were on track using a probabilistic model. Most clients engaging with Vanguard’s Personal Advisor Services had a good chance of achieving their stated retirement goals.

According to the paper, 80% of the clients with a defined retirement goal had an 80% chance of reaching that goal, while 20% had goals incongruent with their projected levels of retirement resources. Vanguard noticed that these results were highly skewed. The average investor had an 86% chance of achieving their retirement goals.

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