Global uncertainty triggers increased anxiety about volatility
Brexit, political uncertainty, rate hikes and sluggish US economy worry investors.
According to a quarterly survey of financial advisors by global asset manager Eaton Vance, managing market volatility continues to be advisors' top concern.
- Volatility scored 129.7 on the Advisor Top-of-Mind Index (ATOMIX), the highest ranking of any concern since inception and the top concern for financial advisors for the fourth consecutive quarter.
- Advisor concerns about generating income for clients ranked second overall at 122.8, a significant jump from 108.1 in Q2.
- Growing wealth through capital appreciation ranked 103.1, a dramatic increase from 83.0 in Q2.
- Reducing tax exposure ranked 72.2, reflecting a slight increase from 67.3 in Q2.
Investor concerns about the markets remain elevated as well with four out of five advisors (82%) reporting their clients are motivated by fear when making investment decisions, the highest percentage to date.
"The surprise Brexit outcome, ongoing political uncertainty, the possibility of more rate hikes and a sluggish U.S. economy has thrown many advisors and their clients into a state of heightened anxiety," said John Moninger, managing director of retail sales. "While unsettling, this environment creates an opportunity for advisors to calm investors' fears, discuss the opportunities that emerge from market volatility and reaffirm long-term investment plans."
Client communication remains a priority. In the wake of the Brexit vote, 67% of advisors proactively contacted clients to discuss long-term strategies and potential opportunities.
Despite increased anxiety about the markets, there is little consensus among advisors about what to expect in the second half of 2016. Close to half of advisors (45%) are bullish on U.S. equities over the next quarter, with 17% reporting a bearish attitude and 38% currently undecided.
Posted: 09/01/2016 12:21:00
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