The number of retirement advisors fearing they will have to battle clients' aversion to risk, especially with rising strife overseas, is about twice as large today as it was last year, according to Hartford Funds.
Respondents to a Hartford survey of more than 100 advisors indicated that they are largely split over whether anxiety has caused clients to make poorer investment decisions over the last year, with 52 percent saying it has and 48 percent saying it has not.
While this is 5 percent fewer advisors who say that anxiety has caused a negative reaction from clients, they're not so sanguine about clients' risk-aversion — with 35 percent believing that clients will become more risk-averse in the coming year. That's a lot more than last year, when only 17 percent of advisors believed risk-aversion would be the negative factor to be addressed.
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"Investing has never been without some level of anxiety and this year's survey results underscore the need for advisors to continue recognizing and addressing this behavior for more productive client relationships," said John Diehl, senior vice president at Hartford Funds, adding:
"The same is true of investment opportunities where consumers may lack understanding, such as international equities — particularly in the midst of geopolitical turmoil."
Advisors, meanwhile, are the ones experiencing anxiety — with 40 percent of respondents indicating that international strife is either the greatest or second greatest cause of their own sleepless nights. And if they're worried about geopolitical turmoil, they say that their clients are most anxious about international investments. Nearly half (49 percent) of respondents said that that was clients' chief worry, compared with domestic equities (18 percent), global/international bonds (13 percent), income-focused bond holdings (11 percent) and core bond holdings (10 percent).
They may be anxious, but they're still investing. Morningstar data indicates that one-year flows into international equities were more than $135 billion as of July, compared with flows to domestic equities, which only racked up about $28 billion for the same period.
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