This is not a piece about why you cannot invest without us. You can. There are people who happily run their own portfolios for forty years and end up better off than half the clients of advice firms. They are rarer than they think, but they exist.
The question worth answering is narrower. When advice does work, what is it actually worth?
Most people decide on intuition. They look at a fee, multiply it by twenty years, and decide it sounds expensive. They do not run the same calculation on what staying invested through 2008 would have meant for their wealth, or what a poorly structured retirement income costs them at 78. Advice is not free. Neither is going without it.
Vanguard’s number is 3%
The cleanest study on adviser value is Vanguard’s. They have run it for over fifteen years, update it annually, and it is not gentle on advisers who do not earn their keep. Their conclusion is that a competent adviser adds up to 3% in net annual return. Not always. Not for everyone. But up to.
The 3% breaks down roughly as follows. Behavioural coaching contributes up to 200 basis points, the largest piece by a wide margin. Tax-aware placement and withdrawals adds up to 110 basis points. Spending strategy in retirement adds up to 120 basis points. Asset allocation, rebalancing and cost-effective implementation contribute the rest, between 0 and 60 basis points each.
The pieces do not simply add. You do not get 5% from someone who only does the rebalancing. The 3% upper bound is what a complete, integrated practice can be worth. Which is why piecemeal advice from three different brokers tends not to deliver it.
The behaviour gap, and why it is worse than people believe
DALBAR has been measuring American investor returns against the markets they were invested in for thirty years. The gap is not academic.
In 2024 the average US equity investor earned 16.54%. The S&P 500 returned 25.05%. The investor lost 848 basis points to themselves. Not to fees. Not to manager underperformance. To buying high, selling low, and reading too much news.
DALBAR’s “Guess Right Ratio”, the percentage of months in which retail investors timed the market correctly, was 25% last year. Three out of four calls were wrong.
We have local equivalents to DALBAR. Momentum’s 2025 behavioural research found that South African investors paid a behaviour tax of 1.27% in discretionary unit trusts and 1.28% in living annuities. The cost of switching at the wrong moment. That number had improved from earlier years. It still represents over a percent annually, indefinitely, vanishing into the difference between what the fund returned and what the investor earned.
This is the piece of advice nobody quite believes until they have lived through a cycle with it. The cheapest hour we ever spend with a client is the one before they make a decision they cannot undo.
Tax. Boring. Massive.
The most overlooked source of value in advice is tax.
The order in which you save (retirement annuity, then tax-free savings account, then discretionary). The order in which you draw down (taxable income first, capital later). The timing of harvesting losses. The structure of your offshore allowance. The use of preservation funds at retirement. None of these are interesting at a dinner party. All of them, compounded over a working life, produce more wealth than picking the right fund manager.
Morningstar’s Gamma research, which focuses specifically on retirement income decisions, puts the value at 1.82% per year. Equivalent to 29% more retirement income over a working life. That is not a marginal improvement. That is the difference between running out of money at 81 and dying with a comfortable estate at 92.
The South African context
Three local numbers worth holding in mind.
10X Investments’ Retirement Reality Report from 2023 to 2024 found that 6% of South Africans are on track to retire comfortably. Six. Of the rest, 35% will have to keep working past their official retirement age. Another 37% do not know what they pay in fees on their existing plans. A further 37% have no idea what kind of plan they actually have.
This is the demographic into which advice gets sold in this country. The argument against advice (“I can do this myself”) is rarely the position of the person currently struggling. It is almost always the position of the person who has not yet looked.
The Financial Planning Institute’s 2023 South African consumer research found that, of clients currently working with a CERTIFIED FINANCIAL PLANNER®, 87% agreed the advice brought more value than it cost. 90% felt “tangibly better off”. 94% trusted their planner. These are people who are paying for the service and are happy they are.
What advice doesn’t do
It does not pick winners. It does not beat the market. It does not protect you from a 30% drawdown when 30% drawdowns happen.
It does not, in our experience, work for everyone. There are people for whom advice does not pay. Those with simple needs, ample discipline, and the time to do it themselves. We try, when we meet them, to tell them so. The first conversation is at our cost partly so that we can.
The numbers above are averages and upper bounds. None of them is a guarantee. A bad adviser destroys value. So does a passive one. So does a good one matched to the wrong client.
What advice rarely fails at, when delivered well, is the second-order work. The plan that survives a job loss. The estate that does not get tied up in litigation. The widow who does not get exploited by her late husband’s broker. The retirement that does not run out at 78. These are the things you do not see on a quarterly statement, and they are where most of the 3% lives.