Financial advisors and clients have very different ideas about what are critical conversations, according to Russell Investments’ latest Financial Professional Outlook (FPO), a quarterly survey of U.S. financial advisors, investors and advisors, which was released on Wednesday.
The survey concludes that advisors need to do more to ensure clients are focusing on factors critical to long-term financial security.
The survey polled almost 450 financial advisors working in more than 200 national, regional and independent advisory firms nationwide. These advisors reported that their clients most frequently initiated conversations about their worries over government policy (58%), market volatility (51%) and global events (41%), while advisors themselves were concerned about portfolio performance (42%), keeping up with inflation (35%), estate planning (35%) and tax implications of investing (32%).
“The latest survey results underscore that the advisor has a critical role to play when it comes to helping clients focus and avoid becoming distracted by short-term market moves and big news stories,” said Kristin Gibson, director of strategic distribution partnerships for Russell Investments, in a press release. “In order for advisors and their clients to get on the same page, advisors first need to acknowledge and address investors’ concerns with short-term topics, and then educate them on the importance of establishing goals and sticking to a long-term plan.”
Meanwhile, advisors and clients have different perspectives on market sentiment, according to Russell. The survey found that 76% of advisors reported being optimistic about the capital markets over the next three years, while only 29% say that their clients are optimistic, a continuing challenge since the last survey in February 2011 when 86% of advisors were optimistic about the markets and only 36% felt their clients shared these views.
“Advisors and their clients are having conversations that are starting in very different places. Investors are looking for a reality check on their current situation and direction as to what they need to do in the future and advisors can help clients feel more confident by first putting their concerns into perspective and then refocusing them,” said Gibson.
The survey also found that 81% of advisors report that they believe client needs are different based on gender, and 65% believe investor sentiment on the markets also differs by gender.
“Advisors recognize that there are discernible differences in client needs and perspectives based on gender, and that assets controlled or influenced by women are in no way incidental. In the latest survey, advisors reported that in two-thirds of client households (66% on average), a woman is involved in investment decision-making,” said Gibson. “Female investors are an important and historically underserved target market and successful advisors understand how their priorities, preferences and needs may differ and work diligently to develop relationships in a way that reflects this understanding.”