A majority of advisers are optimistic about capital market conditions over the next three years, but only 7% of those advisers believe their clients are optimistic, according to a quarterly survey from
Advisers, 59% of whom are optimistic about market conditions, say this lack confidence among their clients has become a major concern. Seventy-eight percent of advisoers responding to the survey say that clients see economic uncertainty and slow economic growth as an impediment to reaching their financial goals. Sixty-one percent think that market volatility concerns their clients.
“Advisers know that the global financial crisis has left many of their clients fatigued, jaded and distrustful,” said Phill Rogerson, a managing director of consulting services for Russell’s Private Client Services business. “That skepticism means advisers must now work harder to rebuild their clients’ trust in the capital markets. That trust is of paramount importance because most individual investors will almost certainly fail to achieve financial security in retirement unless they choose to engage in a sensible savings and investment plan.”
Sixty percent of advisers said that what concerns them the most is clients underfunding their retirement accounts; 54% also pointed to the federal budget deficit as a prominent concern.
“Advisers see challenges both in how their clients approach financial planning and in the larger economic environment,” Rogerson said. “Our recommendation is for advisers to encourage their clients to focus on what is within their control and view the present situation in a broader time horizon. Advisers can take action to rebuild client confidence in the markets by having the right conversations to address fears and focus on the levers you can control – spending, income and investment.”
Advisers said 34% of their clients who are retired or near retirement have changed their plans to maintain or achieve their retirement goals since the financial crisis. As a result, 69% of advisers say that those clients making changes are either working longer or going back to work.
While 56% of advisers say clients making changes to their retirement plans have altered their investment strategy, only 33% indicate that clients are increasing their savings rates.
Matt Ackermann writes for American Banker.
