What is the real value of a financial advisor?
According to the 2025 Value of an Advisor report by Russell Investments, the answer is surprisingly clear: 5.6% per year.
This figure reflects the combined financial benefits that advisors deliver through better decision-making, tax efficiency, strategic planning and behavioural support. But the report also highlights something deeper: Australians who receive financial advice experience more confidence, more control and stronger financial wellbeing than those who manage their finances alone.
Below, we break down how the 5.6% value is calculated and why good advice continues to demonstrate measurable benefits.
The formula behind the 5.6% value
Russell Investments used its established “Value of an Advisor” framework to quantify the tangible components of advice:
A – Appropriate asset allocation (1.3%)
Tailoring portfolios to the appropriate level of risk and diversification adds meaningful long-term performance compared to ad-hoc investment choices.
B – Behavioural coaching (3.1%)
The largest single contributor. Advisors help clients avoid emotional decision-making, especially during market volatility – one of the biggest destroyers of wealth for unadvised investors.
C – Choices (not included in the 5.6%)
This relates to personalised strategic decision-making. While highly valuable, it varies significantly between individuals and wasn’t included in the numerical result.
E – Expertise (technical and emotional)
Also excluded from the calculation, but considered “priceless.” Clients consistently rate this as a core reason for seeking advice, especially when navigating complex tax, retirement or investment structures.
T – Tax-savvy planning (1.2%)
Structuring portfolios, contributions and withdrawals tax-effectively can materially improve net outcomes.
Together, the measurable components total 5.6% annual value, demonstrating that advice delivers more than peace of mind – it delivers quantifiable financial benefits.
Download the full report here
What Australian investors say they value
Russell surveyed 700 investors (both advised and unadvised) and nearly 200 advisors to understand what Australians truly value in an advice relationship.
Key findings include:
- 89% of advised clients feel more confident and knowledgeable about their financial situation.
- 85% feel supported to make decisions aligned with their values and lifestyle goals.
- 86% believe advice has improved their overall financial position.
In contrast:
- 57% of unadvised investors feel only slightly or moderately confident managing their finances.
- 76% say they would feel more in control if they engaged a financial advisor.
- Among advised clients, 81% rate their advisor at least 8/10.
Despite rising costs since the Royal Commission, 84% of advised clients still rate financial advice as good or excellent value, regardless of fee model.
A gap between what advisors think clients value, and what clients actually value
The report highlights a fascinating mismatch:
- 70% of advisors believe the greatest financial benefit they provide is preventing costly mistakes.
- Clients rank this seventh.
Meanwhile:
- 86% of clients rank “feeling in control of their finances” as the top emotional benefit,
- Advisors rank it third.
This reinforces the importance of strong communication, expectation-setting and ongoing engagement – consistent with what Australians are searching for on Google and Bing when evaluating “how to choose a financial advisor” and “what makes financial advice valuable.”
Why retirement planning remains the biggest driver of advice
Retirement planning remains the number-one reason Australians seek advice, and the benefits are clear:
- 42% of advised clients retire before age 65, compared to
- Only 20% of unadvised clients.
Early retirement and improved financial security go hand-in-hand: 80% of advised clients report peace of mind about their financial future.
This aligns with a common consumer question: “Does financial advice help me retire earlier?” According to the data – yes, in many cases it does.
The Value of Advisor Index: what drives client satisfaction?
Beyond the 5.6% formula, the 2025 report also introduced a Value of Advisor Index, which measures the factors that most strongly influence satisfaction.
Top drivers of client satisfaction were:
- Technical expertise
- Emotional expertise
- Appropriate asset allocation
Interestingly, these rated higher than tax optimisation or behavioural coaching – suggesting that clients value clarity, capability and confidence from their advisor above all else.
So, what element would you value most? The results may surprise you.
Why this matters and why advice still pays off
As financial decisions become more complex, Australians are asking questions like:
- Is financial advice worth it?
- How much value does a financial advisor add?
- Do I need an advisor as I get closer to retirement?
The research consistently points to the same conclusion: Sound financial advice delivers both measurable financial benefits and meaningful emotional advantages.
For many Australians, the right advice means feeling more secure, more confident and more in control; and achieving better financial outcomes along the way.
To explore the cost–value equation in more detail, our very own Chris Payne, Principal Wealth Advisor at LDB, shares his insights in a short video. Watch it below.
Download the full 2025 Value of an Advisor report here.
Are you ready to discuss the benefits of financial advice?
At LDB, our financial advisors based in Blackburn in Melbourne’s City of Whitehorse, work closely with clients across every stage of life to build clarity, confidence and better financial outcomes. Call us on (03) 9875 2900 or get in touch online to discuss how quality advice can support your goals.
Or you can follow LDB on LinkedIn for tax and business advisory updates.
