Home / Advice / Guide, guru, gladiator: The different roles of a financial adviser in 2024

From behavioural coaching to asset allocation and emotional support, the evolving role an adviser plays sees them take on a raft of heroic guises. The value of that role is now at least 5.7 per cent of clients' investible funds according to a new report. 

The financial worth of an adviser’s counsel is difficult to truly quantify, but the team at Russell Investments have pinned that value at 5.7 per cent or above for the year 2024, a fraction below what it was worth in in both 2023 (5.9 per cent) and in 2022 (5.8 per cent).

While the financial value of an adviser is relatively stable, the challenges advisers face with respect to their clients continues to evolve.

They remain a combination of “guide”, “guru” and “gladiator” for their clients, according to the Russell Investments team, but the nature of the help they provide is very much shaped by the salient social, economic and regulatory issues of the time.

In 2024, the greatest financial benefit advisers gave to their clients was the behavioural coaching they provided, according to Russell’s Value of an Adviser Report, which accounted for a 3.3 per cent total value-add. Yet the nature of that behavioural coaching is very much a product of the environment we find ourselves in, and the emotional challenges that can “cloud” financial decision-making are not the same this year as they were in 2023.

“Today, these emotional challenges are the reverse of just a few years ago,” the report states, noting that until this year the focus for advisers was on ensuring clients understood the value of maintaining a properly constructed portfolio during a volatility era marked by the pandemic, emerging global conflicts and surging interest rates.

“The challenge in 2024 has been curbing investors’ enthusiasm as the AI boom and anticipated interest rate cuts pushed markets to record highs,” the report states. “There is always a risk of investors falling into the trap of buying while markets are bullish and selling when sentiment turns bearish, as history shows it does.”

This is where the machinations of asset allocation come into play, with portfolios being re-weighted at regular intervals helping clients stay on track with their long-term financial plans. “Investors are more likely to grasp the benefits of that process when presented with the historical advantages of maintaining a steady investment strategy instead of chasing quick wins, then bailing when the market turns sour.”

Asset allocation in itself is another big – and measurable – driver of value, Russell says, with the “biggest weapon in an investor’s arsenal adding 1.1 per cent of value. “It far outweighs the impact of individual stock selection,” the report adds.

The other measurable impact is ‘tax savvy financial planning”, especially as it pertains to superannuation and estate planning, which Russell values at 1.3 per cent of portfolio value add.

Apart from these quantifiable areas, there are two areas that provide measurable benefits; the first is “choices and trade-offs”, which has “variable” value given the disparate circumstances, preferences and considerations of each client, while the second is the “priceless” expertise an adviser brings.

The expertise factor starts at attaining goals, Russell says, but extends to more personal assistance measures during times of crisis, “providing counsel as people negotiate challenges such as redundancy, relationship breakdowns, ill-health and death”.

The three Gs

This spectrum of expertise sees an adviser play several roles, including that of a “guide”, “guru” and “gladiator” over the course of a client’s life according to the Russell Investments team.

As a “Guide”, advisers need to help clients shoulder the emotional burdens encountered through life, with financial worry being a primary driver of those emotions. “Clients who are often overwhelmed by their financial affairs may rely almost entirely on their advisers,” the report says, adding that others may opt for more control yet still value their adviser as a “sounding board”.

The “Guru” role of an adviser relates to the role they play as an expert and a “voice of reason”, including deploying their technical knowledge to help clients make the right decisions. “This is perhaps most evident in tax planning and structuring of financial affairs to reach the most optimal outcomes,” the report says.

The final guise of an adviser, that of a “Gladiator”, speaks to the role they play as an advocate and defender of their clients. “This could mean challenging a refused insurance claim, solving social security hiccups, or administration of finances,” Russell says. “In all instances, it allows a client and their family to focus on themselves during periods of stress.