Among those currently working with a financial advisor, the vast majority say their advisors’ insight is valued even more today and has helped them remain confident during this period of economic uncertainty, but one generation was not as convinced.
According to findings from State Street Global Advisors’ “Inflation Impact Survey: Advisor Edition,” nearly all (90%) say they value their financial advisors’ knowledge and guidance even more in these uncertain times, and 86% believe their advisor has helped them remain confident amidst rising inflation and market volatility.
The survey also revealed that, among those working with a financial advisor, about three-quarters have discussed inflation with their advisor—including how inflation will impact their investment goals in both the short and long-term. Overall, approximately half of investors (49%) agree that it’s better to work with a financial advisor when there is volatility in the market.
The release of the advisor-related data follows the initial findings of SSGA’s Inflation Impact Survey, which found inflation-induced stress and anxiety is influencing investor behavior regarding short-term budgeting and committing to long-term financial goals. It also analyzed the value provided by financial advisors during a time of heightened volatility and uncertainty.
“The top two questions advisors are hearing from their clients today are, ‘Is now a good time to invest?’ and ‘How can I protect my portfolio against inflation,’” says Allison Bonds, head of Private Wealth Management at State Street Global Advisors.
Gen X Doubt
Interestingly, however, when examining the generational differences in attitudes about working with an advisor, Gen X respondents were the least likely to work with an advisor in today’s volatile markets. Only 42% agreed it is better to have the guidance of an advisor compared to 63% of Millennials.
Additional insights from SSGA’s Benchmark Survey conducted in 2019 reveals that the top two reasons Gen Xers balk at having advisors are that:
- they prefer to have full control over their investment decisions (46%); and
- they don’t trust that financial advisors have their best interest in mind (41%).
But given that Gen Xers are the most concerned with rising inflation and that most are also concerned about their ability to afford retirement and staying the course with their current investment strategy, SSGA suggests that now could be an opportune time for this generation to be more proactive about seeking help from a financial professional.
“Advisors have an opportunity to cultivate trusting, collaborative relationships with Gen X clients who want to remain involved in making their own investment decisions to a greater extent than other generations,” says Bonds. “Gen Xers are in their peak earning years and in the accumulation phase of their financial planning, yet they are also juggling multiple financial priorities.”
Tolerance for Volatility
Meanwhile, a comparison of prior years’ comfort levels with market volatility shows that the market’s ups and downs are making investors queasier, SSGA notes.
When asked how much they agree with the statement, “I am comfortable with the highs and lows of the financial markets,” just 31% agree, which is significantly lower than a year ago (51%) and about the same as the height of the pandemic (33%) in 2020.
Millennials are the standout, with 49% saying they are comfortable with the volatility, compared to 22% of Gen Xers and 24% of Boomers.
“Millennials possess a glass half-full mentality when it comes to their financial futures. They know they have a longer time horizon to ride out the downturns and inflationary pressures,” says Bonds, who adds that 63% are optimistic they will reach their financial goals despite record inflation, whereas most investors in other generations believe inflation is an obstacle to meeting their objectives.
SSGA further observes that there seems to be some ambivalence as to whether now is a good time to put more money to work in the market. The survey found that a third (33%) of investors agree that now is a good time to invest more, while 36% neither agree or disagree, and 25% disagree. Not surprisingly, Millennials (47%) are significantly more likely to think it’s a good time to invest than Gen X (34%) and Boomers (24%).
“The old adage about investment success being about time in the market, not timing the market rings true today,” adds Bonds. “Advisors who use a goals-based approach can help clients who are vulnerable to overreacting when markets take a downturn. This approach can help clients remain confident about their financial plan even in volatile markets.”
Conducted in partnership with A2Bplanning and field partner Prodege, SSGA’s Inflation Impact Survey was conducted from June 28–July 5, 2022, among 243 adults with investable assets (IA) of $250,000 or more (nearly half of those are currently working with a financial advisor).
