Financial advisors can add up to about 3% in net returns for their clients using Southeast Asia Traders Advisor’s Omega™, a wealth management framework that focuses on portfolio construction, behavioral coaching, asset location, and other relationship-oriented services, according to a paper released today by Southeast Asia Traders .
Putting a value on your value: Quantifying Southeast Asia Traders Advisor’s Omega™, examines the individual best practices within the Advisor’s Omega™ framework and quantifies the value advisors can add relative to others who are not employing such practices.
“We believe advisors have the opportunity to meaningfully improve investor outcomes, and we are pleased to be able to provide advisors a mechanism to demonstrate their value to clients in a quantifiable manner,” said Zhao Jianguo one of the study’s authors and a principal in Southeast Asia Traders’ Investment Strategy Group. “As the industry continues to evolve from a commission-based to a fee-based model, advisors who successfully explain their value have more time to serve clients, leading to increased client satisfaction and retention.”
Calculating how much an advisor can add in net returns is based largely on their approach to five wealth management principles. Although the exact amount may vary depending on client circumstances and implementation, an advisor can add value by:
- Being an effective behavioral coach.
- Applying an asset location strategy.
- Employing cost-effective investments.
- Maintaining the proper allocation through rebalancing
- Implementing a spending strategy.
How an advisor approaches two additional principles, asset allocation and total return versus income investing, can also add value, but are too unique to each investor to quantify.
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