The Value of Financial Advice to Households

This chapter explores the evolution of financial advice, highlighting its shift from a portfolio-centric approach to a more holistic one. It also discusses the reasons for needing financial advice and the relationship between financial literacy and advice, acknowledging the variation in quality and channels of advice available.

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This week we welcome back return guest Preet Banerjee, a renowned speaker, personal finance expert, consultant, and author of Stop Overthinking Your Money. Listeners may remember Preet from his previous appearance on the show back in 2019 when he was first embarking on his doctoral journey. Several years and one pandemic later, Preet has finally made it through the monumental task of completing his dissertation! We spend today’s conversation with Preet getting into the fascinating details of his research which interrogates the value of financial advice within households and explores the pressing question of whether it’s worth getting it. Preet provides a comprehensive overview of the current state of financial planning and shares his most intriguing findings before unpacking the policy and regulatory recommendations that emerge from his research. The latter part of the show includes our Mark to Market segment with Mark McGrath, where this week, he delivers key insights on retirement savings plans (RSPs) and why he believes RSPs are actually tax-free. You’ll also hear our reflection on our past conversation with Colonel Chris Hadfield, paired with a book review of Kevin Kelly’s Excellent Advice for Living: Wisdom I Wish I'd Known Earlier. Join us for an expansive episode on the value of financial advice along with timely insights on what truly matters in life!

Key Points From This Episode:

(0:03:34) Background on today’s guest, Preet Banerjee, and the focus of his research: the value of financial advice to households and whether it’s worth getting it.
(0:06:29) Key problems with past research attempting to demonstrate the value of financial advice (including the portfolio-centric advice model).
(0:10:47) A review of the existing literature on the value of financial advice; the gap in the literature that his research is addressing.
(0:16:27) How Preet measured holistic wealth scores and comprehensive financial confidence in his research and the dataset he based his research on.
(0:21:26) What Preet took into account to determine who were DIY investors within his sample and which advice channels they use.
(0:28:27) The study of financial planning, shortcomings within the field, and some of the positive developments in recent years.
(0:30:00) Informative takeaways regarding advice channels, investable assets, and having a financial plan.
(0:36:30) How Preet approached his data, the progressive regression model he developed, and what it demonstrates about key topics in his research.
(0:47:36) How wealth allows you to access better financial advice versus the options available to you if you’re in the mass market.
(0:49:48) Learn about the policy and regulatory recommendations that emerge from Preet’s research.
(0:56:04) Preet’s advice to listeners and DIY investors and what’s next for his research.
(01:05:17) Our Mark to Market segment with Mark McGrath and his insights of everything you need to know about retirement savings plans (RSPs).
(01:18:02) A recap and review of Episode 266 where we talk with Colonel Chris Hadfield and why it’s worth the listen.
(01:20:39) Hear our review of the book, Excellent Advice for Living: Wisdom I Wish I'd Known Earlier by Kevin Kelly.
(01:25:34) Our after-show section; Find out what we have coming up and how to attend our upcoming meet and greet.