The role of the financial adviser is rarely more valuable to an investor than at times of extreme market volatility. Managing expectations, soothing jangled nerves and helping clients stay on track with their financial plan can strongly reinforce an adviser's value proposition.

The core satellite investment strategy proves that indexing and active funds can comfortably sit side by side in a portfolio. Michael Houlihan, Vanguard's Retail Products and Technical Services Manager said: "Many of the large Australian superannuation funds currently use a 'core-satellite' investment strategy and we are seeing an increasing number of advisers applying this strategy to their client portfolios. The main benefit of this approach is that advisers can efficiently implement their asset allocation targets using lowcost index funds and alter the active fund exposure to achieve a desired risk/return profile."

In many investment firms, fund managers come and go -  unless, of course, they work for Vanguard. "In the 11 years we've been in Australia, only two investment professionals have resigned," said Vanguard's chief investment officer Eric Smith. Vanguard's fund manager turnover is low by industry standards. Estimates of annual turnover of senior fund managers range from between 20 to 50 per cent, according to a Securites Industry Research Centre of Asia-Pacific report on the Australian Investment Management Industry. So what is Vanguard's secret? Eric Smith believes it hasa lot to do with the company's client focus and its approach to investing - indexing. "That's something that the people who come here to work pick up on -  we're very client focused."

The value of the strategic advice an adviser provides is fundamentally judged by the return that a client gets to keep after fees and tax are paid. Ensuring clients understand the value added through theadvice process is the cornerstone of building successful relationships. A critical element of this mix is understanding how your client's investment is impacted by tax. Up until now, very few fund managers have provided detailed information about the after-tax performance of their funds to allow advisers to select funds on a tax effective basis. As a result some clients receive unexpected tax bills - never an ideal result. This is particularly relevant today as three years of strong markets have dissipated any tax losses of the past.

Everyone loves a tax cut and the income tax changes that came into effect in July 2005 and those that will come into effect from July this year make it even more important for clients to understand what the after-tax returns on their investments are. So with this in mind it is worth considering a number of tax effective investment strategies for your clients for the forthcoming year.