Although two years has passed since the equity market bottomed out under the financial collapse, financial advisors and baby boomers polled by MetLife are still concerned about market volatility.
But the numbers suggest that financial advisors are doing a lot more thinking about the issue. In the study, “Market Volatility Poll,” 88% of advisor respondents believed volatility in their clients’ retirement accounts raised concerns about retirement and financial security. Just 56% of baby boomers felt the same way. The study was released on April 11. Harris Interactive polled 1,038 baby boomers and about 500 financial advisors in early February.
“Advisors were more cognizant of fee issues and its impact on clients,” said Julia Lennox, the vice president of marketing for retirement at MetLife. That division also conducts consumer research. “Clients have shorter memories than advisors do, and when we did the poll, it was a pretty calm period. There may be some of that impact.”
Lennox, reached by phone, also noted that consumers who worked with financial advisors were more aware of volatility’s impact on their retirement finances.
As baby boomers invest for retirement, they are taking a more balanced approach, more so than they did right after the financial crisis ensued. In 2008, three-fourths of boomers preferred to protect portfolios against losses, rather than catch market gains, according to the 2009 iteration of the study. This time, MetLife found a roughly 50-50 split in preferences between protecting principal and participating in gains.
A lot of financial advisors, 51%, said investors need alternative investments to manage portfolio volatility better. Only 38% of advisor respondents said that a “mix of stocks, bonds and cash” would suffice to manage volatility in retirement portfolios. Also, 75% of advisors said they were interested in products that would provide more consistent returns for clients.
“We’ve been telling people they should be following a traditional plan of relatively balanced equities and hold them for the long term,” Lennox said. “To have that many people say ‘I think there needs to be a new strategy,’ or ‘I’m not sure’, that says to us there is an opportunity for a conversation.”