Informed Investing

Advisor and Investor Perspectives on Risk, Returns, and Investment Management

Download the report here

Informed Investing

Advisor and Investor Perspectives on Risk, Returns, and Investment Management

By IN Research and T. Rowe Price — April 30, 2019

The following is an excerpt from a new research brief, “Informed Investing: Advisor and Investor Perspectives on Risk, Returns, and Investment Management” co-developed by InvestmentNews and T. Rowe Price. The report explores current attitudes toward risk among investors and advisors, as well as their views about investment managers, styles and products. To download the full report, which contains exclusive research and actionable insights, please click here.

When asked how risky they perceived the current stock market to be, 70% of advisors considered it to be moderately risky, while 13% termed it very risky.

Advisors see less market risk, more opportunity than investors

When asked how risky they perceived the current stock market to be, 70% of advisors considered it to be moderately risky, while 13% termed it very risky. In contrast, 56% of investors felt the market was moderately risky, while 22% said it was very risky and 4% said it was extremely risky — a response not given by advisors at all.

To be sure, the investor responses were colored, in part, by the timing of the survey, which was conducted during the sharp market decline of December 2018. However, 85% of investor responses were received before Dec. 7. While the market was volatile until that date, the largest losses occurred later in the month, and rallies in January and February erased most of December's stock market losses. Still, long-term investors who experienced the 2008-2009 financial crisis appear to continue demonstrating sensitivity to market risk.

The results of the InvestmentNews/T. Rowe Price survey reveal that advisors, concurrent with their view of market risk, are more optimistic about market performance in 2019 than are investors. Looking ahead to the end of the year, most advisors — 56% — believe that the market will be higher by 5% to 10%. Investors, while generally optimistic too, are less so. Just 27% believe the market will be up by 5% to 10%, while 12% believe it will decline by that percentage and another 9% believe the market will be off by less than 5%. Advisors were less pessimistic: just 3% believe the market will be down 5% to 10% and 2% feel the drop will be less than 5%.

FIGURE 1: How risky do you think the U.S. stock market is right now?
FIGURE 2: Where do you see the total US stock market 12 months from now?

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IMPORTANT INFORMATION
This material is provided for informational purposes only and is not intended to constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or a recommendation to take any particular investment action. The views contained herein are as of March 2019 and are subject to change without notice; these views may differ from those of T. Rowe Price Group companies and/or associates.
T. Rowe Price is not affiliated with InvestmentNews.
T. Rowe Price Investment Services, Inc.
2019 T. Rowe Price. All rights reserved. T. Rowe Price, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.
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