The most critical component of any advisor/client relationship is communication, but it seems clear from an MFS Investment Management survey released on Monday that advisors and investors are speaking a different language.

MFS Investment Management, the oldest mutual fund company in the United States, revealed a number of disconnects between advisors and their clients: 20% of advisors believe investors are most worried about a major decline in the stock market, but only 5% of investors say they are. At the same time, 72% of advisors think US equities are an excellent or very good place to invest, while only 35% of investors agree. Three-quarters of advisors also think that investors have become much more or somewhat more risk tolerant over the past year, but only 15% of investors report they have.

Meanwhile, there seems to be an even greater disconnect among advisors and Gen X/Y investors, those under age 46. Eighty-four percent of advisors think Gen X/Y investors’ primary investing goal is growing assets, but only 39% of Gen X/Y investors report this as a primary goal. Advisors think Gen X/Y have 50% of their investments in US equities and 9% in cash, when in actuality Gen X/Y report 34% equity exposure and 30% of their investments in cash.

Advisors also believe investors are less optimistic about the U.S. economy over the next  five years than they really are, with 35% of advisors reporting that investors are optimistic, while 47% of investors reported being optimistic.

“While these disconnects show a need for advisors to reconsider how they view their clients, the survey showed that advisors are underestimating investors' optimism about the future of the U.S. economy,” said William Finnegan, senior managing director of retail marketing for MFS, in a statement. “With Gen X/Y maturing and Boomers approaching critical decision points for retirement, we believe advisors should reassess how they communicate with clients, and what the lasting impact of 2008's financial crisis has had on investors' risk tolerance.”

MFS, through Research Collaborative, an independent research firm, sponsored an online survey from February 7-15, 2011, of 596 individual investors with $100,000 or more in household investable assets, and 612 licensed financial advisors (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales.

MFS manages $231.2 billion in assets on behalf of individual and institutional investors worldwide, as of February 28, 2011.


Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access