What is the value of Financial Advice?

We are joined by Robert Whelan, Managing Director of Rockwell Financial to get a better understanding of the fiscal value associated with financial advice. We also gain some insight into the average saving on tax made by Icon Accounting clients throughout 2021.

What is the value of financial advice?


When most people think of a financial advisor, they think of someone who picks the best investments. By investing in the ABC fund, you’ll get a better investment return than by investing in the XYZ fund.

Whilst there is some truth to this, it’s only a small part of the puzzle. For instance, you might be interested to know that in 2021, the average saving for Icon Accounting clients was a saving of €8,512 in tax liability by contributing to a pension and setting up an Income Protection plan.

Of course, there’s some personal contributions to this as well but it’s always nice to know you have diverted some of your hard-earned cash to your benefit rather than giving it all to the taxman.

Quantifying the value of financial advice


The real value of working with a financial advisor is in avoiding expensive mistakes.
It’s less about picking the best investment and more about making smart decisions with all aspects of your money. That in itself is a more difficult concept to get your head around, but, it doesn’t mean that it’s not true.
To try and provide some context, Vanguard commissioned an independent study to understand what is the value of working with a financial advisor.

Ignoring the fund performance (ABC vs XYZ), the study found that clients with a financial advisor on average earned about 3% per year more than those without an adviser.

Other studies confirm and support these findings. For example, the well renowned DALBAR study finds that the average Do-It-Yourself Investor underperforms by around 3% per year through poor decision making.



How much does 3% per year add up to?

Whilst 3% per year might not sound like much, over time, it can add up to a very big number!

To provide context with an example, let’s assume that you have €250,000 in investments.
In an average year, these investments might grow by 5% per year. Over a period of 15 years, your investments would grow to €495,000.

If you work with a financial advisor and achieve the extra 3% per year, the same investment would grow to €734,000. Nearly €240,000 more!

Both studies show this isn’t about finding a better investment to generate an extra 3% per year. It’s about avoiding costly mistakes, like selling at the wrong time, taking too much risk, or indeed paying too much tax by not taking advantage of the tax relief available to you.

The moral of the story is that a good financial advisor should add significantly more value than it costs to work together.

The 7 biggest benefits of working with a Financial Advisor

1. Asset Allocation

Getting the right ‘mix’ of investments is the most important investment decision. How much should you invest in equities, bonds, cash and the like? Invest too cautiously and you won’t get the returns you need. Invest too aggressively and you’ll lose sleep at night.

A financial advisor will help you define your objectives for the investment. They will create a well thought out investment policy statement, identifying the right mix of investments for you. This ensures that you take the right level of risk and are best placed to achieve the returns you need.

2. Portfolio Rebalancing

To maintain the right mix of investments, you need to rebalance the portfolio every so often. This involves selling some of the investments and using the money to top up the others. Emotionally, this can be difficult to do, as we can become attached to certain investments.

A financial advisor will review the portfolio objectively and rebalance as required. This ensures that you maintain the right mix of investments and don’t take too much risk.

3. Cost Management

In most areas of life, you get what you pay for. If you pay more, you get more. But in the world of investing, you get what you don’t pay for. When you think about it, it makes sense. Costs matter, because every pound you pay in costs eats into your future returns.

A financial advisor can reduce your charges by providing access to institutional investments with lower costs. This ensures you keep more of any investment return.

4. Investor Coaching


Investing can provoke strong emotions. When our investments fall by 20%, we panic. When our investments rise by 20%, we celebrate.

The problem is, we’re all human. We’re hard-wired to avoid pain and seek pleasure. So naturally, we tend to sell our investments when they fall, and we buy them when they rise.

A financial advisor will act as a voice of reason between you and an expensive mistake. They will provide sound, objective advice, helping you stick to the plan and remain invested.


5. Tax Management

Taxes can be a major drag on your investment returns. Selecting the right ‘tax wrapper’ is just as important as selecting the right investment strategy.

A financial advisor will help you work out which accounts are right for you based on your tax position. They will consider the tax rate you pay now and consider the tax implications when you come to withdraw the money.

6. Withdrawal Strategy

How you withdraw money from your investments can have a big impact on your overall return. Which account should you withdraw from? Which investments should you sell?

A financial advisor will create a withdrawal strategy for your investments. This ensures that withdrawals are as tax efficient as possible and that you maintain the right mix of investments.

7. Income Management

Your investments will produce income, such as dividends. Unless reinvested, this money will sit idle, producing no return. You may also need to withdraw some income from the portfolio.

A financial advisor will reinvest any income the portfolio provides. They will also determine which investments are sold when you need to withdraw money.



How can Rockwell help?

At Rockwell we can help you avoid expensive mistakes and make smart decisions with all aspects of your money.

If you want to know more about how we can help, simply book in for a no-cost, no-commitment meeting with one of our Advisors by contacting your account manager at Icon Accounting, or if you are not yet a client of Icon Accounting, reach out to the team by contacting info@iconaccounting.ie or by calling 01-8077106 where the team will be more than happy to set up a call on your behalf.


Robert Whelan

Rockwell Financial Management

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