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As upcoming regulatory changes put the spotlight on the cost of financial advice, now, more than ever, investment advisers are left having to prove their worth to investors.

The changes, known as the second phase of the client relationship model (CRM2), will provide investors with greater transparency in the fees they pay for financial advice and on the performance of their investment funds.

As of July, 2016, financial advisers will be required to provide fee information directly to clients in dollar terms. But matching dollar figures to the value of advice is creating new expectations among Canadians, and financial advisers will now have the additional pressure of living up to those expectations – or risk being kicked to the curb.

As a result, many advisers have been preparing their clients for the changes to come and identifying exactly what is included in the price for advice in what the industry has labelled an adviser's "value proposition."

In the study for financial advisers, Putting a Value on Your Value, released Tuesday by Vanguard Investments Canada Inc., research indicates that "the value proposition of advice is changing. Advisers will have to add value, or alpha, through relationship-oriented services such as providing cogent wealth management via financial planning, discipline, and guidance, rather than by trying to outperform the market."

One of the challenges is there is still a portion of investors who are unaware that they pay for financial advice at all.

According to a 2014 survey of mutual-fund investors by Pollara, only 27 per cent of investors could say they "definitely" believe that part of the fees charged within mutual funds are used to compensate their financial adviser, while 43 per cent of investors replied "I think so." Another 30 per cent believe do not believe they pay for financial advice through embedded fees.

While CRM2 has ramped up client conversations around the value of advice, the role of the adviser has been continually evolving over the last decade.

As the industry identified a major gap in financial-planning needs for investors, financial advisers moved away from being transactional stock pickers, says Dan Richards, CEO of Toronto-based ClientInsights, a consultant to financial-advisory firms. Many advisers now incorporate an overall wealth-management approach that includes tax planning, wills and estate planning, charitable giving and insurance needs.

"The way a typical adviser works today is unrecognizable compared to 15 years ago," says Mr. Richards. "More advisers have started to shift to a financial-planning orientation and the result of this shift is we now see financial advisers who are true financial advisers, rather than just investment advisers."

Vanguard's new study suggests that advisers who provide clients with more than the basic investment management, and follow a certain set of best practices, has the potential to add approximately 3 per cent in net returns to their clients' portfolios.

Best practices would include: offering low costs funds, re-balancing portfolios, not engaging in market timing, asset allocation and "behavioural coaching" – in other words, helping investors stay the course, says Francis Kinniry, a principal of Vanguard's investment strategy group.

Vanguard research found the discipline and guidance that an adviser might provide an investor through behavioural coaching could be the largest value-add available – adding 1 per cent to 2 per cent in net return.

"One of the largest components of success is helping clients stay on track during a bear market, or convincing them to re-balance when they don't feel like it's the right thing to do at the moment," says Mr. Kinniry.

Another industry driver of change is the rise in technology platforms such as discount brokerages and robo-advisers. These "industry disruptors" have forced investment advisers to re-evaluate what they are offering clients.

Despite initially being shunned in the advisory world, robo-adviser platforms are now being explored by a number of wealth-management firms in Canada as a potential partner to an adviser's business.

"Through the advancement of technology, advisers will now be able to very quickly and efficiently do a large portion of the work that they spent hours doing in the past," says George Hartman, managing partner at ELITE Advisors Canada Ltd. This will now leave advisers more time to spend on relationship-management issues, he added.