Are Financial Advisors Worth Their Fee?

Do they add enough value to cover their fee? We dive into to unpacking the qualitative and quantitative components of potential value for investors from fee-only advisors. We also compare fee-only advice with other forms of advice and discuss why investment advice alone isn’t enough to justify 1% per year.

 

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Chapters:

00:00 Do Advisors Add Value Beyond Their Fee?

03:48 Investor Motivations for Hiring an Advisor1,2 – only 7-12% of investors cite returns as the primary reason they are hiring an advisor

09:41 Quantifying Advisor Value3,4 – the challenges of estimating value that is dependent on actions someone would take otherwise and incorporating nonfinancial factors

12:39 Asset Allocation and Rebalancing5,6,7 – are you taking the right type of risk (diversified) or enough risk?

25:17 Product Selection8,9 – do you know what fees you are paying and if you don’t, it’s probably more than necessary

32:08 Asset Location – matching the tax-efficiency of different investments with the appropriate type of account

40:43 Behavioral Coaching – helping investors understand when they shouldn’t take action and if they should take action, what is it?

50:04 Generating Income in Retirement8 – and avoiding ‘Boomer Candy’ products that prey on the desire for income

53:34 The Importance of Insurance – learning to detect the difference between insurance that protects and insurance that invests, which is typically inefficient

57:11 Tax Planning and Projections – good investment advisors should fill the gap left by tax preparers focused on tax compliance

01:02:16 Commissioned Advice – knowledgeable about the products they sell but incentivized to sell you more than you need

01:07:12 Fee-Only Advice – point in time advice is good but proactive advice unlocks more opportunities to add value

01:13:53 Different People Value Different Things At Different Times – the value of an advisor changes over time

 

Sources:

1 Why Do Investors Keep Their Advisor Around (Morningstar, 2024): https://www.morningstar.com/financial-advisors/why-do-investors-keep-their-financial-advisors-around

2 Dimensional Investor Study (2021): https://my.dimensional.com/2021-global-investor-study-key-takeaways

3 Vanguard’s Advisor Alpha (2022): https://corporate.vanguard.com/content/dam/corp/articles/pdf/putting_value_on_your_value_quantifying_vanguard_advisors_alpha.pdf

4 Russell’s Value of An Advisor (2025): https://russellinvestments.com/content/dam/ri/files/ca/en/individual-investor/insights/value-of-advisor.pdf

5 Money Doctors (Gennaioli, Shleifer, and Vishny, 2012): https://ssrn.com/abstract=2133429

6 The Three Ways To Beat The Market (Greenspring, 2025): https://youtu.be/XeGNGWNbF-8

7 What Can We Learn From Elite Institutions (Greenspring, 2025): https://youtu.be/2wXKgVGUmyo

8 Generating Retirement Income and the Allure of ‘Boomer Candy’ (Greenspring, 2025): https://youtu.be/Ms8uRmOC6EE 

9 The Truth About Annuities (Greenspring, 2025): https://youtu.be/2gGq4lX2yP4

 

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