Full Text Available
Note: Clicking the button above will open the full text document at the original institutional repository in a new window.
The cost and value-add of using a financial advisor
This study investigates the quantitative value of advice added by financial advisors in South Africa; where value is measured through return differentials between advised and non-advised investors. A sample of 3189 individual investors from a large South African investment manager was analysed over...
Saved in:
| Main Author: | |
|---|---|
| Other Authors: | |
| Format: | Thesis |
| Language: | English |
| Published: |
Department of Finance and Tax
2021
|
| Subjects: | |
| Tags: |
No Tags, Be the first to tag this record!
|
| _version_ | 1867613275497168896 |
|---|---|
| access_status_str | Open Access |
| author | Moosa, Abdallah |
| author2 | West, Darron |
| author_browse | Moosa, Abdallah West, Darron |
| author_facet | West, Darron Moosa, Abdallah |
| author_sort | Moosa, Abdallah |
| collection | Thesis |
| description | This study investigates the quantitative value of advice added by financial advisors in South Africa; where value is measured through return differentials between advised and non-advised investors. A sample of 3189 individual investors from a large South African investment manager was analysed over a period of approximately five years, from 4 August 2014 to 31 July 2019. The primary focus of this study is to determine whether financial advisors create value for investors relative to the cost of advice, by investigating if a significant difference exists between the net of advisor fee returns earned by advised and non-advised investors. It also examines investor trading behaviour and assesses if any significant correlations exist between the number of trades made and returns earned. Current South African literature has a limited consideration of the cost of advice when considering the overall value added by financial advisors and has been found to consider a limited range of investment funds and asset classes. This study examines a range of ten investment funds that cover a range of asset classes and examines investment performance both before and after advice fees. The data is also analysed to examine the trading behaviour differences with the correlation between trading and investment returns also examined. The results of this study show that overall, the returns generated by non-advised investors are not significantly different from the returns generated by advised investors before advisor fees are considered. When advisor fees are considered, the impact of advisor fees creates a significant difference in performance between advised and non-advised investors; leading to non-advised investors performing the same or better after fees are considered. The trading behaviour showed that advised investors made statistically significantly fewer trades than non-advised investors. The results did not show strong evidence of return differentials arising from the timing of trade decisions, for either advised or non-advised investors. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/33871 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:33:33.643Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2021 |
| publishDateRange | 2021 |
| publishDateSort | 2021 |
| publisher | Department of Finance and Tax |
| publisherStr | Department of Finance and Tax |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/33871 The cost and value-add of using a financial advisor Moosa, Abdallah West, Darron Financial advisor cost of advice value add trading behaviour This study investigates the quantitative value of advice added by financial advisors in South Africa; where value is measured through return differentials between advised and non-advised investors. A sample of 3189 individual investors from a large South African investment manager was analysed over a period of approximately five years, from 4 August 2014 to 31 July 2019. The primary focus of this study is to determine whether financial advisors create value for investors relative to the cost of advice, by investigating if a significant difference exists between the net of advisor fee returns earned by advised and non-advised investors. It also examines investor trading behaviour and assesses if any significant correlations exist between the number of trades made and returns earned. Current South African literature has a limited consideration of the cost of advice when considering the overall value added by financial advisors and has been found to consider a limited range of investment funds and asset classes. This study examines a range of ten investment funds that cover a range of asset classes and examines investment performance both before and after advice fees. The data is also analysed to examine the trading behaviour differences with the correlation between trading and investment returns also examined. The results of this study show that overall, the returns generated by non-advised investors are not significantly different from the returns generated by advised investors before advisor fees are considered. When advisor fees are considered, the impact of advisor fees creates a significant difference in performance between advised and non-advised investors; leading to non-advised investors performing the same or better after fees are considered. The trading behaviour showed that advised investors made statistically significantly fewer trades than non-advised investors. The results did not show strong evidence of return differentials arising from the timing of trade decisions, for either advised or non-advised investors. 2021-09-14T14:24:40Z 2021-09-14T14:24:40Z 2021 2021-09-14T07:00:32Z Master Thesis Masters MCom http://hdl.handle.net/11427/33871 eng application/pdf Department of Finance and Tax Faculty of Commerce |
| spellingShingle | Financial advisor cost of advice value add trading behaviour Moosa, Abdallah The cost and value-add of using a financial advisor |
| thesis_degree_str | Master's |
| title | The cost and value-add of using a financial advisor |
| title_full | The cost and value-add of using a financial advisor |
| title_fullStr | The cost and value-add of using a financial advisor |
| title_full_unstemmed | The cost and value-add of using a financial advisor |
| title_short | The cost and value-add of using a financial advisor |
| title_sort | cost and value add of using a financial advisor |
| topic | Financial advisor cost of advice value add trading behaviour |
| url | http://hdl.handle.net/11427/33871 |
| work_keys_str_mv | AT moosaabdallah thecostandvalueaddofusingafinancialadvisor AT moosaabdallah costandvalueaddofusingafinancialadvisor |