Vanguard translated these results as a possible indication that many clients over-prepare for retirement and have made unnecessary sacrifices in their pre-retirement lifestyles—“living more modestly than they actually need to,” as the report put it.
In emotional outcomes, Vanguard attempted to estimate the fraction of an advisor’s value that came from emotional elements like trust, connection to the advisor, peace of mind and behavioral coaching.
According to a survey of 504 Personal Advisor Services clients, as much as 45% of the total value of an advisory relationship perceived by investors is derived from emotional elements, while the remaining 55% is derived from functional aspects of the relationship like portfolio management and financial planning.
Looking more deeply at the emotional implications of financial advice, clients are deriving the most value from having a relationship with a trusted expert – approximately 55% of the emotional value comes from the mere presence of the advisor-client relationship. Another 28% of the value stems from the protection and assurance that advisors offer, and 7% from planning-related concepts.
When asked about the relative importance of certain expressions of emotional value, the Personal Advisor Services clients ranked trust in their advisor, the monitoring and updating of their financial plan, and the feeling that they are on track to meet their goals as the most important.