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The value of good financial advice has never been more obvious than during the pandemic.

A new report has put a number on the cost of a financial adviser during the tumultuous market conditions of the COVID-19 pandemic.

According to Russell Investments’ latest Value of an Adviser Report, Australians with financial advisers were approximately 5.2 per cent better off last year than non-advised Australians.

The report emphasised the importance of asset allocation, suggesting that as much as 85 per cent of an individual investment outcome can be derived from this quality.

Despite this, Russell Investments said there’s a lack of knowledge and low interest from investors when it comes to understanding how to optimise their asset allocation accordingly.

A lack of clarity around this area was a recurring theme in the report, with 67 per cent of investors unaware of the asset allocation of their own super fund.

The report also found that while 81 per cent of investors aged under 35 were seeking stable returns, 66 per cent failed to answer basic financial literacy questions on diversification.

“While some investors are enthusiastic about their capabilities, many lack the skills, knowledge and time to research the many investment options available to them,” said Russell Investments’ director, head of business solutions, Bronwyn Yates.

Ms Yates noted that non-advised investors sometimes fail to make the correct decision when markets are volatile.

“Often, non-advised investors are tempted to chase performance and overreact to market events, like the sudden periods of market volatility witnessed in recent times,” she said.

She warned that poor timing when it comes to exiting and entering the market can be a costly mistake.

“This is an issue which plagues both those with loss aversion, and those convinced they can beat the market,” she said.

In contrast, she said that investors who have been educated by a financial adviser feel more comfortable staying the course.

The relationship between risk and return is said to be one of the most common knowledge gaps for unadvised Australian investors.

Acknowledging the rising ranks of Millennials and Gen Z turning to ‘finfluencers’ as their source for financial advice, Ms Yates said the value of sound financial advice has never been more obvious than last year.

“While it’s positive that investors across generations are becoming more engaged with their finances, and that they have more guidance options than ever before, the value of professional advice clearly speaks for itself in our report findings,” she added.

According to Ms Yates, the biggest takeaway of the new report is the suggestion that the value of a financial adviser is far greater than just keeping clients updated on the progress of their investment.

“Beyond the material value of financial advice, the peace of mind and comfort that advisers provide clients is critical, and it is important for advisers to be able to clearly communicate those benefits,” she said.