Skip to Content
Advisor Insights

Gamma in Action

Financially sound households get advice from financial planners.

In 2013, Morningstar researcher Paul Kaplan and I introduced a concept we called gamma.[1] Gamma attempts to quantify the potential value of financial planning. As U.S. households increasingly become responsible for more financial decisions, such as determining how much to save for retirement, how to invest those savings, and when to retire, and yet typically lack financial acumen, financial advisors are well-positioned to help improve household financial decision-making. Indeed, a growing body of theoretical research, including our gamma research, has noted the potential value of advisors in a variety of financial domains; however, empirical evidence on the topic is mixed and generally suggests households that use financial advisors do no better (or even worse) than those who don’t, especially when it comes to investment-related domains.

These findings may be explained in a variety of ways. One explanation could be that the empirical research, which is largely investment-focused, has not captured value created in other domains such as improved savings rates or life insurance coverage. Another reason could be that certain types of advisors, such as financial planners, provide valuable services that are not consistently captured in a relatively broad financial advisor description.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.