Portfolio management is once again the top priority for financial advisors, according to the latest quarterly results from the Fidelity Advisor Investment Pulse survey.
The survey’s third quarter 2017 results also show that concerns about risk volatility and the equity market level tied for the No. 2 ranking at 15% of respondents, remaining near the top of the list for advisors as they continue to focus on protecting clients from a possible market correction or downside risk. Interestingly, even though risk volatility came in second, the percentage of respondents dropped from 24% in the second quarter to 15% in the third.
Meanwhile, focus on the government and economy dropped to No. 4 after ranking No. 1 for the past four quarters, from 29% of respondents in the second quarter to 12% in the third quarter. While placing fifth on the list, focus on interest rates increased to 11% from 5%.
The Advisor Investment Pulse is an ongoing research project that seeks the views of Fidelity Institutional Asset Management advisor clients in the broker-dealer and registered investment advisor communities through an online survey. The third quarter results include 123 advisors who responded to the open-ended question: “Thinking about the investing environment and outlook, and the potential impact on your client portfolios, what investment challenge or opportunity would you say is top-of-mind for you right now?”
Among the areas that advisors said they are focused on:
- Keeping clients focused on their goals and not just the highest returns
- De-risking portfolios
- Making sure client portfolios are allocated properly
- Possible market correction
- Portfolio due diligence
- How to pick better funds
Fidelity suggests that advisors are increasingly focused on what they can control – building a portfolio management process to help protect clients from volatility and downside risk. But with the number of investment options skyrocketing, choosing investment vehicles for a portfolio has become more challenging. This presents an opportunity for advisors who have in place an effective due diligence process to differentiate themselves, according to the firm.
“As advisors continue their focus on protecting clients from a possible market correction and downside risk, they should consider long-term and diversified strategies for portfolio construction,” says Bob Litle, head of Intermediary Sales, Fidelity Institutional Asset Management.
In addition to using commonly referenced investment selection criteria – such as parent, people, process, performance and price – advisors can evolve their portfolio construction approach by using a framework that considers how various investment combinations work together, the report further suggests. “A portfolio construction approach that focuses on a client's overall portfolio can help advisors examine the underlying exposures of all investments – and pursue opportunities to create that ‘championship’ team,” adds Litle.
