Vanguard Advisor’s Alpha

An advisor’s value can be added through a combination of portfolio construction techniques, using better wealth management practices, and coaching through different market environments to make sure no shortsighted decisions are made.

Source: Putting A Value On Your Value: Quantifying Vanguard Advisor’s Alpha

Portfolio Construction   +

Asset Allocation Using Diversified ETFs And / Or Mutual Funds

Proper asset allocation delivers significant value, but is difficult to quantify with a broad brush due to the unique investor profiles for each investor. (Potential value: > 0%)

Being Mindful Of Fees

Simply put, the more your investments cost, the greater the dent in your returns. (Potential value: up to 0.45%)

Managing The Asset Allocation With Taxes In Mind

Properly investing assets in both taxable and tax-deferred accounts is another way advisors can deliver value to their clients. (Potential value: up to 0.75%)

Investing For Income Versus Generating Total Return

An emphasis only on income can lead to taking on excess risks, so a focus on total return may enhance diversification and offer better tax efficiency. The value-add is difficult to quantify due to the uniqueness of each investor and his/her need for income. (Potential value: > 0%)

Wealth Management   +

Rebalancing To Maintain Target Allocation

With different investments and categories generating various returns through time, there is a likelihood of the portfolio’s asset allocation changing from the intended target. Periodic rebalancing maintains a portfolio that is broadly consistent with a client’s intended preference. (Potential value: up to 0.35%)

An Appropriate Drawdown Strategy

As more and more investors begin to retire and need to withdraw from the portfolio, it is important to consider the most effective ways to take money out for living expenses. (Potential value: up to 0.70%)

Behavioral Coaching

A Steady Guide Through Good And Bad Times

Advisors also add value by coaching clients and ensuring that they look past short-term concerns in order to stay disciplined and focus on the bigger goals could be very valuable. (Potential value: up to 1.50%)