Survey Says Clients Are Confident in Advisors

Experienced registered investment advisors (RIAs) know that the advisor/client relationship is very much a two-way street and one largely built on trust.

That trust is earned over time and isn’t entirely built on portfolio performance, though that’s certainly part of equation. Something else advisors know is that one of the bedrocks of fruitful, long-lasting client relationships isn’t so much about the returns delivered during bull markets, but how the advisor helps the client during rough markets.

Additionally, helping clients navigate life milestones and unexpected surprises are critical components in the advisor/client relationship. All of that is to say that while many advisors likely didn’t major in psychology, there are elements of psychology and talk therapy involved with being an advisor.

Advisors that ignore those factors risk practice growth trajectories and chasing off business. Conversely, advisors that embrace the task of fostering confidence among clients are likely to be rewarded with long-lasting relationship while the likelihood of referrals increases. Fortunately, data confirm clients are currently confident in their advisors.

Important Details From State Street Survey

The aforementioned ebullience is illustrated in the 2023 ETF Impact Survey: Advisor Edition, courtesy of State Street Global Advisors (SSGA), which indicates more than eight in 10 clients are satisfied with how advisors are helping them deal with a turbulent market environment.

“The percentage of US investors indicating they value their financial advisors’ knowledge and guidance even more during uncertain times held steady at 89% compared to June 2022, when it was 91%; 81% indicate their financial advisor has helped them remain confident in this period of rising inflation and market volatility, compared to 86% in June,” according to the SSGA survey.

Those are important data points because while risk assets are rising to start 2023, scenarios such as high Treasury yields, persistent inflation and the specter of a slowing economy will take longer to work through. Translation: 2023 is a new year and one that hopefully will bring better outcomes than 2022, but clients are likely to continue leaning advisors this year.

“Helping clients remain confident and committed during times of volatility can be a challenge for advisors whose clients may have a kneejerk reaction to abandon their investment strategy if markets get choppy,” said Brie Williams, head of Practice Management at State Street Global Advisors. “Our survey found 86% of investors have discussed market volatility with their financial advisor and 83% say their advisor has informed them of how volatility will affect their long-term financial goals.”

Data from the SSGA survey also indicate that while a substantial percentage of clients are optimistic about their financial futures, nearly three-quarters remain concerned about inflation. It’s not a stretch to say many of the clients most concerned about inflation are retirees or those nearing that stage.

The good news for advisors and retired clients alike is that there are practical strategies for combatting inflations, several of which can help advisors display value-add propositions to clients and some of these tactics don’t require material alterations to portfolio holdings.

Retirement Concerns Abound, Too

Likely very much related to the inflation concerns, clients are growing concerned about their retirement pictures, signaling important opportunity for advisors.

“Worry over retirement is seeing an uptick, with 52% indicating concern about saving enough for retirement versus 45% in June. Similarly, 50% fear running out of money in retirement versus 46% in June,” notes SSGA.

Fortunately for advisors, the survey also confirms they don’t need to subject clients to undue risk simply in the name of grappling with inflation because many clients maintain the view that they’re confident in their advisors’ ability to deliver over the long-term.

“It seems investors are getting the message about sticking to their long-term investment strategy. The survey found even with volatility in the market, 57% of US investors plan to keep their money ‘as is’ and stick to their long-term strategy,” concludes SSGA.

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