A new survey of registered investment advisors shows that fears of a recession have taken the lead as the top concern of their clients.
The most recent results from E-TRADE’s Independent Advisor Sentiment survey show that the top concern among RIAs’ clients is a recession (33%) — up seven percentage points from the second quarter and replacing volatility for the top spot.
Not surprisingly, emotions loom large with clients. Advisors said the biggest mistake clients make is trying to time the market (43%), which is consistent with last quarter’s findings. Not saving enough for retirement is next at 22%, down from the 27% who said the same during the second quarter.
Advisors, meanwhile, remain focused on volatility, even though their clients appear less concerned about it. According to E-TRADE’s findings, volatility is the number one risk that RIAs are actively managing in client portfolios, registering at 68% – slightly less than the 75% seen during the second quarter. This was followed by interest rates (56%) and a flattening/inverted yield curve (43%).
As for opportunities, advisors are eyeing IT above all other sectors.Advisors noted in the survey that sectors with the most opportunity for their clients in the next few months are information technology (53%), health care (43%) and financials (34%). E-TRADE notes that this is consistent with the second quarter findings.
“Advisors are focusing on the fundamentals of our economy, which are on relatively solid footing despite how late we are in the bull market run,” notes Matt Wilson, head of E-TRADE Advisor Services. “Amid the recent market volatility, advisors can really demonstrate their value to clients – shoring up defenses in client portfolios, helping them understand the bigger picture and encouraging them to stay focused on their long-term goals.”
Following is a more detailed breakdown of the results.
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When it comes to the market, what are your clients contacting you most about? |
||
|
|
Q3 2019 |
Q2 2019 |
|
Fears of a recession |
33% |
26% |
|
Market volatility |
24% |
47% |
|
China and US trade tensions |
22% |
11% |
|
Gridlock in Washington |
7% |
5% |
|
Economic weakness abroad |
3% |
0% |
|
Federal reserve monetary policy |
2% |
1% |
|
Flattening/inverted yield curve |
2% |
1% |
|
Other |
3% |
4% |
|
None of these |
4% |
5% |
|
What is the biggest mistake you see your clients making? |
||
|
|
Q3 2019 |
Q2 2019 |
|
Trying to time the market |
43% |
43% |
|
Not saving enough for retirement |
22% |
27% |
|
Prioritizing their dependent’s financial needs over their own |
14% |
11% |
|
Acting on stock tips that don’t align with long-term goals |
10% |
8% |
|
Asking for early withdraws from retirement accounts |
7% |
5% |
|
Other |
3% |
4% |
|
None |
1% |
2% |
|
What risks are you actively managing right now when it comes to client portfolios? (Respondents were asked to select all that apply.) |
||
|
|
Q3 2019 |
Q2 2019 |
|
Market volatility |
68% |
75% |
|
Interest rates |
56% |
53% |
|
Flattening/inverted yield curve |
43% |
39% |
|
Recession |
40% |
41% |
|
Political instability |
34% |
33% |
|
Inflation |
22% |
30% |
|
Armed conflict, war, or terrorism |
5% |
7% |
|
None of these |
4% |
5% |
|
Other |
2% |
2% |
|
What industries do you think offer the most potential for your clients this quarter? (Respondents were asked to choose their top three.) |
||
|
|
Q3 2019 |
Q2 2019 |
|
Information technology |
53% |
51% |
|
Health care |
43% |
34% |
|
Financials |
34% |
34% |
|
Consumer discretionary |
26% |
11% |
|
Consumer staples |
22% |
23% |
|
Energy |
21% |
26% |
|
Communication services |
12% |
8% |
|
Utilities |
10% |
8% |
|
Industrials |
9% |
12% |
|
Materials |
6% |
5% |
The survey was conducted July 16-29, 2019, among a sample of 305 independent RIAs.
