Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. Listeners to this podcast would know I'm a very big fan of financial advisors. Every day we're insisting that listeners get professional advice to help them make good investment decisions. That's why I love research like this that calculates the actual value of an advisor in Australia. It's an annual report released by Russell Investments, a leading global investment management and solutions partner, which is a great supporter of this podcast. Neil Rogan is the Managing Director ahead of Distribution at Russell Investments. Neil, Welcome to Fear and Greed.

Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. Listeners to this podcast would know I'm a very big fan of financial advisors. Every day we're insisting that listeners get professional advice to help them make good investment decisions. That's why I love research like this that calculates the actual value of an advisor in Australia. It's an annual report released by Russell Investments, a leading global investment management and solutions partner, which is a great supporter of this podcast. Neil Rogan is the Managing Director ahead of Distribution at Russell Investments. Neil, Welcome to Fear and Greed.

Thank you, Sean.

Thank you, Sean.

The Value of an Advisor report's been around for seven years. Why does Russell Investments produce it now? Men?

The Value of an Advisor report's been around for seven years. Why does Russell Investments produce it now? Men?

Sean, We've been doing this, as you said, for seven years and really emanated from us. We've been doing globally for around a decade, and then during around twenty eighteen in Australia where a lot of advisors had been almost beaten up, we wanted something that showed our support not only to advisers but also to consumers around both qualifying and quantifying the value advisors provided, and also to provide a toolkit for advisers to help them build their confidence in what they were providing, particularly at the time when the industry was I want to say suffering, but was going through enormous change. And now we're out the other side of that. A lot of advisors and their clients really are resonating with this report and clearly understand a lot of value then advisors providing to them.

Sean, We've been doing this, as you said, for seven years and really emanated from us. We've been doing globally for around a decade, and then during around twenty eighteen in Australia where a lot of advisors had been almost beaten up, we wanted something that showed our support not only to advisers but also to consumers around both qualifying and quantifying the value advisors provided, and also to provide a toolkit for advisers to help them build their confidence in what they were providing, particularly at the time when the industry was I want to say suffering, but was going through enormous change. And now we're out the other side of that. A lot of advisors and their clients really are resonating with this report and clearly understand a lot of value then advisors providing to them.

Yeah, I think that's really important. What I like about the report. I understand why it's good for a person like me, but I also see the benefits for a financial advisor. The report found the total value of an advisor in Australia is approximately five point seven percent. Now that's just a number. What does it mean. I mean, we're not actually talking about investment routiness here, We're talking about something totally different.

Yeah, I think that's really important. What I like about the report. I understand why it's good for a person like me, but I also see the benefits for a financial advisor. The report found the total value of an advisor in Australia is approximately five point seven percent. Now that's just a number. What does it mean. I mean, we're not actually talking about investment routiness here, We're talking about something totally different.

Yeah, I mean, an advice is going to help you with a whole range of things, ranging from your asset allocation all the way through to identifying opportunities around tax and tax effective investing. And what this report demonstrates is that if you add acid allocation, managing some of the behaviors helping you manage choices and trade offs and really positioning their expertise and tax planning advice that that's the five point seven percent in addition probably to the investment return that the asset your acid allocation that matches your risk profile is going to give you. But also in addition to that, there may be some individuals where some of these elements may be of a higher value to some individuals depending on their circumstance. So let's just break down some of those elements. So it's A plus B plus C plus E plus t A. Starting with asset allocation, run I mean, just quickly run us through those yep, so asset allocation. Really we find that close to sixty two percent of Australians are in their default superannuation plan and often you know that default doesn't match their true risk profile. So sitting down with an advisor or a professional who can step them through what their true risk profile is. But in addition to that, it's also maybe now we're in a stage of having a range of sustainable funds also aligning maybe to their values as well, so either also you know, so it's risk return as well as potential values now and so really sitting down with a professional going through that, and not only does it give the investor the investment that they're looking for, but probably also provides them with a lot more confidence around understanding what they're investing in and ensuring that's a line to where they want to go with their future.

Yeah, I mean, an advice is going to help you with a whole range of things, ranging from your asset allocation all the way through to identifying opportunities around tax and tax effective investing. And what this report demonstrates is that if you add acid allocation, managing some of the behaviors helping you manage choices and trade offs and really positioning their expertise and tax planning advice that that's the five point seven percent in addition probably to the investment return that the asset your acid allocation that matches your risk profile is going to give you. But also in addition to that, there may be some individuals where some of these elements may be of a higher value to some individuals depending on their circumstance. So let's just break down some of those elements. So it's A plus B plus C plus E plus t A. Starting with asset allocation, run I mean, just quickly run us through those yep, so asset allocation. Really we find that close to sixty two percent of Australians are in their default superannuation plan and often you know that default doesn't match their true risk profile. So sitting down with an advisor or a professional who can step them through what their true risk profile is. But in addition to that, it's also maybe now we're in a stage of having a range of sustainable funds also aligning maybe to their values as well, so either also you know, so it's risk return as well as potential values now and so really sitting down with a professional going through that, and not only does it give the investor the investment that they're looking for, but probably also provides them with a lot more confidence around understanding what they're investing in and ensuring that's a line to where they want to go with their future.

Okay, so B which is behavioral coaching, which is something that you probably don't think a lot about, but it's really important.

Okay, so B which is behavioral coaching, which is something that you probably don't think a lot about, but it's really important.

Oh, behavioral coaching, I would say is one of the most important. So, behavioral coaching where value added around three point three percent. And really the role of an advisor here is to ensure investors are invested during the market, stay invested in during the market downturns, and also during the upside as well, and that they're staying the course and in the report and also just more broadly, we give the example of an individual who went to cash in March of twenty twenty. The value of that cash if that stayed in cash today, if you had one hundred dollars stayed in cash from March twenty twenty to pretty much today, value of that cash would be worth around seventy five dollars. Versus staying invested, it'd be upwuts of around one hundred and twenty four dollars. So you see those kinds of examples, and I know that you know it's about time in the market rather than trying to time the market. And I'm sure you've hadn't You've heard from many clients to say, well, I'm going to I'm going to go to cash and I'm going to invest my money back in the market when and it's always when you know, Donald Trump or whatever gets elected. It'll be, and then it'll be I'll invest that after Christmas, and then it'll be I'll wait till the financial year.

Oh, behavioral coaching, I would say is one of the most important. So, behavioral coaching where value added around three point three percent. And really the role of an advisor here is to ensure investors are invested during the market, stay invested in during the market downturns, and also during the upside as well, and that they're staying the course and in the report and also just more broadly, we give the example of an individual who went to cash in March of twenty twenty. The value of that cash if that stayed in cash today, if you had one hundred dollars stayed in cash from March twenty twenty to pretty much today, value of that cash would be worth around seventy five dollars. Versus staying invested, it'd be upwuts of around one hundred and twenty four dollars. So you see those kinds of examples, and I know that you know it's about time in the market rather than trying to time the market. And I'm sure you've hadn't You've heard from many clients to say, well, I'm going to I'm going to go to cash and I'm going to invest my money back in the market when and it's always when you know, Donald Trump or whatever gets elected. It'll be, and then it'll be I'll invest that after Christmas, and then it'll be I'll wait till the financial year.

Suddenly you're out of the market.

Suddenly you're out of the market.

Yeah, exactly. And we've done some research about missing the best forty days of the market. So over a ten year period, you miss the best forty days of the market, you're losing thirty two percent of the value of your money versus staying invested where you're upwards of one hundred and thirteen percent.

Yeah, exactly. And we've done some research about missing the best forty days of the market. So over a ten year period, you miss the best forty days of the market, you're losing thirty two percent of the value of your money versus staying invested where you're upwards of one hundred and thirteen percent.

So okay, so that's a plus B plus C. C's about choices and trade offs.

So okay, so that's a plus B plus C. C's about choices and trade offs.

Oh yeah, choices and trade off is really interesting. And so if you look at various life stages of people, I'll use myself as an example. You know, I've got two young boys, lovely wife, those kinds of things, and you know, I'm at the stage where I've got to understand, you know, the costs around education, and so as much as you know, for the cost of educating two boys in Sydney at a reasonably decent school, private.

Oh yeah, choices and trade off is really interesting. And so if you look at various life stages of people, I'll use myself as an example. You know, I've got two young boys, lovely wife, those kinds of things, and you know, I'm at the stage where I've got to understand, you know, the costs around education, and so as much as you know, for the cost of educating two boys in Sydney at a reasonably decent school, private.

School, expensive, Neil expensive, I think is the answer that there goes.

School, expensive, Neil expensive, I think is the answer that there goes.

The annual European holidays short follow week the sun. So that's a choice in a trade off. You know, my wife and I've made to educate our children. So choices and trade offs become really important because there now there's now a decade where we're foregoing these things, maybe a holiday, new car, renovations to the HUD for the price of education. And so sitting down with an advisor who you trust to can step you through not only the choices, these types of choices, but also the trade offs and maybe deferring things for a later period of time. The value of that can be variable, and so in the report we've rated that is variable. And if I look at myself, you know we're deferring these things for around a decade.

The annual European holidays short follow week the sun. So that's a choice in a trade off. You know, my wife and I've made to educate our children. So choices and trade offs become really important because there now there's now a decade where we're foregoing these things, maybe a holiday, new car, renovations to the HUD for the price of education. And so sitting down with an advisor who you trust to can step you through not only the choices, these types of choices, but also the trade offs and maybe deferring things for a later period of time. The value of that can be variable, and so in the report we've rated that is variable. And if I look at myself, you know we're deferring these things for around a decade.

Stay with me, Noil, We'll be back in a minute. I'm speaking to Neil Rogan, Managing Director ahead of Distribution at Russell Investments. Okay, so A plus B plus C plus E E being expertise, and that I think is where financial planners and financial advisors really come into their own.

Stay with me, Noil, We'll be back in a minute. I'm speaking to Neil Rogan, Managing Director ahead of Distribution at Russell Investments. Okay, so A plus B plus C plus E E being expertise, and that I think is where financial planners and financial advisors really come into their own.

Oh yes, this, you know, we rate is priceless. And that's because you know, the financial advisor acts as you know, a guide, a guru, and a gladiator. And you know, if I start with gladiator, be fair to say that most grandparents love their grandchildren more than their children. And so as the gladiator, how does the financial advisor structure assets and their state planning so that you know, the right funds go into the right hands at the right time, particularly you know, in that situation. And also how do they have asset protection at that age where we see increasing incidents of elder abuse. You look at the guru side of things. Financial advisors hold a lot of information in their day to day head that they've accumulated through talking to many, many clients over many years, and even younger advisor is with the training that they have and a lot of the information they have around superannuation, contributions, insurances, asset allocation, all these things are almost seen as guru moments for clients in terms of information that they wouldn't readily have access to. And so the advisor in many cases is a guru with the kind of information they can provide. And then finally the guide. You know, if you've got a goal, how you get guided to achieving that goal. As I said in our case, it's about educating our children and how we achieve that goal. And then I can follow the sun short.

Oh yes, this, you know, we rate is priceless. And that's because you know, the financial advisor acts as you know, a guide, a guru, and a gladiator. And you know, if I start with gladiator, be fair to say that most grandparents love their grandchildren more than their children. And so as the gladiator, how does the financial advisor structure assets and their state planning so that you know, the right funds go into the right hands at the right time, particularly you know, in that situation. And also how do they have asset protection at that age where we see increasing incidents of elder abuse. You look at the guru side of things. Financial advisors hold a lot of information in their day to day head that they've accumulated through talking to many, many clients over many years, and even younger advisor is with the training that they have and a lot of the information they have around superannuation, contributions, insurances, asset allocation, all these things are almost seen as guru moments for clients in terms of information that they wouldn't readily have access to. And so the advisor in many cases is a guru with the kind of information they can provide. And then finally the guide. You know, if you've got a goal, how you get guided to achieving that goal. As I said in our case, it's about educating our children and how we achieve that goal. And then I can follow the sun short.

Then you can maybe a little while yet final one is T A plus B plus C plus E plus T not surprising. Tax heavy planning, yep.

Then you can maybe a little while yet final one is T A plus B plus C plus E plus T not surprising. Tax heavy planning, yep.

As we know most Australians don't like paying more tax than what they should. I think there's very wealthy Australian who wants one's a champion that on behalf of many Australians. They did no longer with us. But tax savvy planning is really important. It starts at the kind of underlying investments you have that your advisor puts you in all the way through to being able to access certain tax benefits. You know, the elderly clients or elderly investors is maybe accessing the pharmaceutical benefit Scheme and those kinds of things for those in as young families. It's around getting the childcare rebates, but also understanding the opportunities that sit around sealary sacrifice and those kinds of things. The type of tax savings by salary sacrificing, even just a little bit if you're on a median income into superannuation can make a big difference over a decade.

As we know most Australians don't like paying more tax than what they should. I think there's very wealthy Australian who wants one's a champion that on behalf of many Australians. They did no longer with us. But tax savvy planning is really important. It starts at the kind of underlying investments you have that your advisor puts you in all the way through to being able to access certain tax benefits. You know, the elderly clients or elderly investors is maybe accessing the pharmaceutical benefit Scheme and those kinds of things for those in as young families. It's around getting the childcare rebates, but also understanding the opportunities that sit around sealary sacrifice and those kinds of things. The type of tax savings by salary sacrificing, even just a little bit if you're on a median income into superannuation can make a big difference over a decade.

So A plus B plus C plus E plus T. You've been through them all? Do all advisors offer all of them?

So A plus B plus C plus E plus T. You've been through them all? Do all advisors offer all of them?

Advisors may offer all of these things through the lifetime of the client, and they may focus on different elements of these at different points of a client's life cycle. So you know, depending on where you are as an investor or as a potential client of the financial advisor, your advisor may cover all of these maybe in the initial meeting, and that focus on particular ones at different points in times. But in the main, what matters most is that an advisor is likely to put you in a better position than where you are today over a period of time.

Advisors may offer all of these things through the lifetime of the client, and they may focus on different elements of these at different points of a client's life cycle. So you know, depending on where you are as an investor or as a potential client of the financial advisor, your advisor may cover all of these maybe in the initial meeting, and that focus on particular ones at different points in times. But in the main, what matters most is that an advisor is likely to put you in a better position than where you are today over a period of time.

Now, thank you for talking to Fear and Greed Pleasure. That was Neil Reagan, Managing directorhead of Distribution at Russell Investments, which is a great supporter of this podcast. This is the Fear and Greed, a business interview. Join us every morning for the full episode of Fear and Greed, business news for people who make their own decisions. I'm chanelma Enjoy your day.

Now, thank you for talking to Fear and Greed Pleasure. That was Neil Reagan, Managing directorhead of Distribution at Russell Investments, which is a great supporter of this podcast. This is the Fear and Greed, a business interview. Join us every morning for the full episode of Fear and Greed, business news for people who make their own decisions. I'm chanelma Enjoy your day.