Study Finds Financial Advisors Add Nearly 5% Per Year in Value—And It Has Very Little to Do with Picking Stocks

When people think about hiring a financial advisor, they usually assume the advisor’s job is to pick winning investments.

After all, isn’t that what you’re paying for?

Surprisingly, the answer is no.

According to Russell Investments’ 2026 Value of an Advisor study, a financial advisor can add an estimated 4.92% in annual value for clients—not by finding the next great stock, but by helping clients make better financial decisions throughout their lives.

Source: Russell Investments, 2026 Value of an Advisor Study (13th Edition). Available at: https://russellinvestments.com/content/dam/ri/files/us/en/financial-professional/insights/value-of-an-advisor-study.pdf

That’s an eye-opening number.

To put it in perspective, an additional 4.92% annual return can translate into hundreds of thousands—or even millions—of additional wealth over a lifetime through the power of compounding. Russell’s analysis attributes value to several aspects of an advisory relationship, including behavioral coaching, financial planning, tax-aware decisions, and portfolio construction.

So where does that value come from?

It’s Not About Beating the Market

Many investors believe the primary role of a financial advisor is outperforming the S&P 500.

But that’s only one small piece of the puzzle.

The biggest opportunities to improve financial outcomes often have nothing to do with finding the next Nvidia or Apple.

Instead, they come from avoiding costly mistakes, making smarter tax decisions, building the right investment strategy, and having a comprehensive financial plan.

Russell Investments identified four primary areas where advisors create measurable value.

1. Keeping Investors From Becoming Their Own Worst Enemy

Perhaps the biggest source of value is something few investors think about: behavioral coaching.

Markets are emotional.

When stocks are soaring, it’s tempting to chase performance.

When markets decline, fear often convinces investors to sell at exactly the wrong time.

History has shown that emotional decisions—not bad investments—are often the biggest destroyer of long-term wealth.

A good advisor provides perspective when emotions run high, helping clients stay focused on their long-term plan instead of reacting to today’s headlines.

Sometimes the most valuable advice isn’t what to buy.

It’s what not to do.

2. Building the Right Portfolio—Not the Flashiest One

Successful investing isn’t about owning the hottest stock.

It’s about owning the right combination of investments for your goals, time horizon, tax situation, and tolerance for risk.

The right portfolio can help investors:

• Reduce unnecessary risk
• Seek to improve long-term risk-adjusted returns
• Generate more reliable retirement income
• Stay invested through market volatility

In other words, investing is less about finding the highest return and more about building a portfolio you can stick with through every market cycle.

3. Reducing Taxes

Investment returns are only half the equation.

What really matters is what you keep after taxes.

For many affluent families, taxes represent one of the largest expenses they’ll pay over their lifetime.

An experienced advisor can often create value through strategies such as:

• Tax-efficient investing
• Roth conversion planning
• Tax-loss harvesting
• Withdrawal sequencing in retirement
• Charitable giving strategies
• Estate tax planning

These strategies may not make headlines, but they can significantly increase after-tax wealth over time, depending on an investor’s circumstances and applicable tax law.

Tax outcomes are not guaranteed, and investors should consult their tax professional regarding their individual circumstances.

4. Helping Clients Make Better Financial Decisions

The best financial decisions aren’t always investment decisions.

Should you pay down your mortgage or invest?

When should you claim Social Security?

Can you afford to retire early?

How much should you spend in retirement?

Should you exercise stock options now or later?

How should you transfer wealth to your children?

For some investors, these decisions can have a much greater impact on long-term financial success than trying to outperform the market by one or two percent.

That’s why comprehensive financial planning has become one of the most valuable services an advisor provides.

The Real Value of a Financial Advisor

Most people hire a financial advisor expecting investment advice.

A comprehensive advisory relationship can deliver something much bigger.

They provide a disciplined process that helps clients make smarter financial decisions year after year.

Those decisions affect everything—from taxes and retirement income to estate planning, risk management, and investment behavior.

Individually, each decision may seem small.

Collectively, they can have an enormous impact on long-term wealth.

That’s why Russell Investments estimates the value of financial advice at 4.92% annually.

Not because advisors can consistently predict tomorrow’s winning stock.

But because they help clients make better decisions over a lifetime.

The Bottom Line

Choosing investments is important—but it’s only one piece of the financial puzzle.

The real value of a financial advisor comes from helping you avoid costly mistakes, manage taxes more thoughtfully, manage risk, and make better financial decisions at every stage of life.

Over time, those decisions can be worth far more than simply trying to pick the next market winner.

Disclosures

Source: Russell Investments, 2026 Value of an Advisor study. The estimated value of advice is based on Russell Investments’ methodology and assumptions and should not be interpreted as additional investment return or a guarantee of future results.

This material is provided for informational and educational purposes only and should not be construed as personalized investment, tax, or legal advice. References to third-party research reflect the methodology and assumptions of the cited source and do not represent a guarantee of investment performance or client outcomes. The value of financial advice varies based on individual circumstances and the services provided. All investing involves risk, including the possible loss of principal. Opal Advisors, LLC is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.