Market volatility could chase investors into advisors’ arms
The number of investors who say they have an advisor is increasing.
Market volatility is weighing on both investors and advisors, says a new report, but volatility could be the key to investors seeking more professional advice over the next 12 months.
That’s according to the Nationwide Advisory Solutions’ fifth annual Advisor Authority Study Special Report, “Safe Havens in an Uncertain World,” which finds that 56 percent of RIAs and fee-based advisors anticipate that market volatility will rise over the next 12 months. Uncertainty is contributing to a fall in optimism among both investors and advisors, and that’s the first time in four years that both have fallen prey to a bleaker outlook.
With uncertainty the driving force, the report adds, the number of investors who say they have an advisor is increasing, up 11 percentage points in four years from 2016’s 51 percent to 2019’s 62 percent.
Investors are more concerned about the potential for a recession, at 58 percent compared with advisors’ 54 percent; they’re also more worried about volatility, at 66 percent compared with advisors’ 56 percent. But advisors are more worried about a bear market, at 56 percent, than investors, at 54 percent.
While they differ from each other in which factors they believe will drive volatility over the coming 12 months—investors cite Washington gridlock, global instability, and economic performance in both the U.S. and China over advisors’ concerns of interest rates and taxes—most RIAs and fee-based advisors say that they have strategies in place to protect client assets against market risk.
Investors are indeed looking to advisors for help, with those who have an advisor saying the chief benefits are advisors helping them stay focused on long-term goals (21 percent), followed by helping them make more informed decisions (20 percent) and protecting their assets against market risk (20 percent).
In addition, investors with advisors are financially still a tad more optimistic than those without; 55 percent of investors with an advisor have an optimistic financial outlook, compared with 54 percent of investors without an advisor). But in 2018, 67 percent of investors with an advisor had an optimistic financial outlook, versus 54 percent of investors without an advisor.
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