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As financial markets and the economy at large are roiled by the effects of COVID-19, financial advisors are being proactive with clients and don't see panic in their ranks, although they do report clients showing heightened concern.
That's among the findings of a report from Practical Perspectives, which also notes that large asset managers, such as First Trust, American Funds, and JP Morgan; broker-dealers and home offices; and information sources like CNBC, Morningstar and the Wall Street Journal are proving to offer the most useful support.
Coronavirus restrictions aren't creating a lot of disruption to serving clients, either, with phone, email and remote conference capabilities enabling advisors to connect. Advisors are relying on asset managers they already work with, and broker-dealers —with the most helpful resources proving to be economic and market updates, portfolio manager insights and client approved materials.
Major changes to portfolios aren't in the cards, with most advisors just increasing cash allocations and moving to less aggressive equities—but they're by and large not only confident about how they're meeting client needs but also predicting a market rebound over the next six months.
How much the market will come back, however, is another story, compared with where it stood at the end of the first quarter of this year.
Damage will likely be seen in revenues and profitability from the crisis. And while they don't expect to emerge completely unscathed, many advisors see silver linings: growth in new client acquisition and enhanced ability to effectively serve clients.
But if the financial strength of advisor practices takes a hit, that could result in faster consolidation and the exodus of smaller advisors from the industry.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
