Financial advisors have become more tactically-oriented in constructing their portfolios this year, and are also trying to incorporate more products with guarantees as their clients remain nervous about the economic outlook, according to a survey released Tuesday by Curian Capital.
Curian, a Denver-based registered investment advisor that is an indirect subsidiary of London's Prudential plc, interviewed 1,804 independent financial advisors from 150 broker-dealers in November to see how the market impacted their portfolio construction and gauge the kinds of products that they think they will use this year.
Chris Rosato, a senior vice president of strategic development at Curian, said that the survey indicates that advisors are looking for more flexibility and control over their clients’ portfolios. “Advisors are trying to show their value and how they are adapting to the economic environment,” he said.
Still, clients remain nervous, despite the market rebound.
“Some clients lost upwards of 35% to 40% of their portfolio … they’re not going to forget that in six months or a year,” Rosato said. “There’s been a fundamental shift in how clients view wealth.”
Indeed, 65% of advisors surveyed said that their clients wanted more conservative investments, and 61% were looking for guaranteed income. Furthermore, 60% of respondents expected to increase their use of variable annuities next year. Rosato said the real challenge for advisors is incorporating variable annuities with other parts of their clients’ portfolios.
Dan Maurer, a senior vice president of marketing at Curian, said that the advisors surveyed want the ability to customize client portfolios and make continuous adjustments to take advantage of changes in the financial markets. Fifty-nine percent of respondents said their clients had three or more financial goals. Maurer said advisors want the ability to meet multiple needs in one portfolio — and explain to clients what each investment is designed for.
“Advisors found that when clients were able to understand the ‘zig-zag’ of their investments they were more likely to stay invested and take advantage of the recovery,” he said.
