Advisers hold steady on equities despite seeing more drops ahead

Advisers hold steady on equities despite seeing more drops ahead
<i>InvestmentNews</i> survey shows most financial professionals in &quot;wait and see&quot; mode, while some consider rebalancing. <i>(Don't miss: <a href="//www.investmentnews.com/article/20150824/FREE/150829959/investors-react-to-news-of-1000-point-fall&quot;" target="&quot;_blank&quot;" rel="noopener noreferrer">Investors react to market's move</a>.)</i>
AUG 25, 2015
The bulk of financial advisers are not changing their clients' exposure to equities in light of recent volatility, even though most believe further dips in stock prices are likely in the coming weeks. About 71% of advisers are keeping client portfolios the same despite the markets' wild swings over the last few days, while 23% said they are boosting clients' equity allocations, according to an InvestmentNews adviser poll taken Monday and Tuesday. About 7% of advisers said they are decreasing the percentage of equities in client portfolios, the online survey, which 469 advisers took, found. “We may rebalance depending on how long it lasts and how deep it is,” said Daniel Lash, a partner at VLP Financial Advisors. So far, because the period of volatility has been so short, people really don't know how much the market is up or down overall at any given moment, he said. (More: What not to say to clients when markets drop) Financial adviser Milad Taghehchian with Pioneer Wealth Management Group said when corrections happen in such short amounts of time, big bounce backs usually follow. U.S. markets ended Tuesday down more than 1% after equities had traded up most of the day. The Dow Jones Industrial Average closed Monday down about 3.5% and the S&P 500 lost almost 4%. The Dow is down 10.5% overall over the past five trading days. MORE DROPS EXPECTED About 61% of financial advisers expect equity markets to experience further drops in the weeks ahead, the poll showed. Mr. Lash said he wouldn't be surprised by additional declines, especially if unexpected news hits, such as the Federal Reserve saying it will raise interest rates in September, or a negative world event like a large oil spill or terror incident. Many investors have been rattled by the recent volatility, sparking calls to their financial professionals. About 65% of advisers received calls from worried clients, according to the InvestmentNews poll. Advisers also overwhelmingly reached out to clients proactively in recent days to quell worries. About 87% said they communicated with clients to provide guidance or reassurance, many making phone calls to clients who they know get especially unnerved by volatility, while connecting with others by email. “Starting at about 7:30 a.m. yesterday morning, we called all our clients to give then an idea of what we were doing, which was to see if any significant rebalancing was necessary,” Mr. Taghehchian said. “Mainly the conversation is to show them we're on top of things.”

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