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Pandemic's Impact on Clients' Risk Appetite, Allocation Recommendations

By Crucial Clips     November 10, 2020
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, Nov. 7, 2020 

MING LI, FA-IQ: Amid the coronavirus pandemic and market volatility, about 40% of financial advisors surveyed by Financial Advisor IQ in July said their clients’ risk appetite changed. Significantly more of the advisors said they altered their clients’ allocations.

Nearly one-third of the advisors said their clients either greatly or moderately reduced their risk appetite since February, before Covid-19 was declared a pandemic. Nearly one-fifth said their clients either greatly or moderately increased their risk appetite. Most, or 64%, said their clients’ risk appetite did not change.

Most, or 72%, of the advisors changed their clients’ asset allocations — in various ways. They increased their clients’ exposure to higher-risk equities, increased exposure to defensive equities such as dividend-paying stocks, and decreased exposure to international investments.

The survey also found that the market turbulence this year made some strategies more attractive to advisors. They became more interested in broad U.S. equity, annuities, smart-beta/factors and U.S. corporate bonds.

For Financial Advisor IQ, this is Ming Li.

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