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FAs' Biggest Challenge Amid Pandemic and Market Volatility

By Alex Padalka April 20, 2020

Out of all the challenges facing financial advisors amid the coronavirus pandemic and market turbulence, the majority of advisors are most concerned about reassuring their clients, according to a recent survey.

"Sometimes, advisors earn their pay by stopping investors from doing something dumb out of panic," Loren Fox, director of Ignites Research, says in a statement. "This is an environment in which financial advisors can earn lifelong loyalty from a client."

Sixty-two percent of advisors surveyed by Ignites Research cited "reassuring their clients" as the most challenging aspect of their job at this time. Ignites Research surveyed 110 financial advisors with between $100 million to $500 million in assets under management. The survey was conducted in March and earlier this month.

"It’s no surprise that investors want reassurance," says Ignites Research's Fox. "One sign of the level of anxiety around the market is the net flows of money into funds in March — money flowing into the safe haven of money-market funds set a one-month record of $685 billion, according to Morningstar."

Far fewer advisors are concerned about finding investment products or tinkering with their clients’ portfolios: only 8% of respondents say the most challenging part of dealing with the pandemic and volatility is seeking investment opportunities, and only 7% say it’s rebalancing or making similar tweaks to asset allocation, according to the survey.

“Volatile markets are not the time to make wholesale changes. You must have some stability before making larger changes,” one advisor tells Ignites Research, which is an FA-IQ sister publication. “What is happening at the present time is trading, not investing.”

Ignites Research's Fox says many investors feel that they want to take action during market crises, but taking dramatic action often isn’t the right choice.

"Financial advisors I’ve spoken with suggest that investors can be reassured by reviewing the financial plan, running through contingency plans, and making small changes such as rebalancing the mix of equity and fixed income," he says.

Nonetheless, 9% of those polled say the most challenging aspect of their job during market volatility is assessing their clients’ risk appetite, according to the survey.

In addition, 6% cite ensuring that their technology systems are working as the most important part of dealing with volatility, Ignites Research found.

“With coronavirus shutting down our country, it is vital to keep working and to ensure that our remote access and our internets are safe, predictable and secure,” another advisor tells Ignites Research.

And 1% of respondents say the most challenging part of turbulent markets is managing their relationship with a brokerage, custodian or other crucial third party, according to the survey findings.

Do you have a news tip you’d like to share with FA-IQ? Email us at editorial@financialadvisoriq.com.

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Tags:  Finding and winning new clients , Client retention , Technology , Investment strategies , Portfolio management , Behavioral finance , Morningstar

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Peter Navaretta Financial Advisor, Broker, Planner
UBS AG Apr. 20, 2020 at 09:48 AM EDT

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I guess all of the firms that left protocol claiming clients were theirs,now all looking at advisors for extraordinary help yo keep their client. Strange