Financial advisers are certainly not in agreement with their clients about the state of the markets.
Financial advisers are certainly not in agreement with their clients about the state of the markets.
A Russell Investments survey, to be released tomorrow, found 59% of advisers are optimistic about the capital markets. In comparison, only 7% of those reps said their clients share that rosy outlook.
The contrasting perspectives, highlighted in the quarterly survey conducted at the end of October, is putting more pressure on financial advisers to move beyond asset management into more of a hand-holding and consulting mode.
“It's clear that advisers have been struggling with a very jittery client base,” said Phill Rogerson, managing director in Russell's consulting-services group.
“I was surprised at the magnitude of the results and how much advisers have had to focus on holding clients' hands,” he added. “Advisers are having a really difficult time getting clients to engage in sensible advice.”
When asked to select the top three client obstacles to reaching their financial goals, 78% of advisers chose slow economic growth, followed by market volatility (61%) and investor cynicism (43%).
By contrast, advisers said the biggest obstacles they see preventing clients from reaching their financial goals include underfunding of retirement accounts (60%), federal budget deficit (54%) and slow economic growth (52%).
“Over the last two and a half years, all clients have become a lot more work because the magnitude of this downturn has really eroded investor confidence,” Mr. Rogerson said. “Even though we have seen signs of a recovery, investor confidence has clearly not come back.”
Fallout from the financial crisis that started to unfold in late 2008 has meant a reworking of a lot of financial plans, according to Mr. Rogerson.
Advisers surveyed said more than 30% of clients who are retired or near retirement have had to change their retirement and investment plans because of the economic downturn.
As a result, 69% of advisers said those clients making changes are either working longer or going back to work, and 62% of advisers believe that their clients are downsizing their expected standard of living in retirement in order to decrease expenses.
While 56% of advisers said that those clients making change have altered their investment strategy, only 33% indicate that clients are increasing their savings rates.
Mr. Rogerson said the findings underscore the need and opportunity for financial advisers to step up and show their true value.
“Many investors are facing difficult decisions right now, and clients need their advisers to be partners in building financial security for retirement,” Mr. Rogerson said. “Investors need help now more than ever, and that means they need a professional adviser and not just somebody pushing products.”
