Don’t know whether you saw this, but Schwab Institutional has released the findings of the “Independent Advisor Outlook Study,” a new semi-annual survey of independent investment advisors that measures their views on the geopolitical landscape, economy and investments. By the end of last year, there were more than 15,000 RIAs across the country, managing some $1.8 trillion of U.S. wealth, says Cerulli, and that nearly 1400 independent investment advisors with some $347 billion in assets under management participated in the study.So, what did they have to say?
First, advisors were pretty positive in their outlook for the S&P 500, with 78 percent of them saying that it will go up. However, on the opposite end, 71 percent think the housing market will continue to soften while 45 percent believe inflation will increase.
Okay, so how are they handling their own clients? Half of the advisors have taken a neutral stance on achieving client investing goals over the next six months, with 47 percent saying it will be neither easy nor difficult. And the clients? Well, they appear to be calm and confident. On average, advisors say that just 15 percent of their clients needed reassurance about achieving their investment goals while 57 percent of the clients have realistic expectations about their returns.
According to independent advisors, their clients’ three top concerns are: retirement (79 percent), financial security for their family (63 percent), and paying too much in taxes (47 percent). Interestingly-enough, less than 10 percent of advisors report that long-term care and health care expenses are the top concern for their clients.
One area that sparked some concern was in dealing with new clients. Nearly half of them came from full-service brokerage firms last year. According to the advisors, new clients who had previously worked with brokers typically came in without investment guideline statements that were aligned with their financial goals, and almost 60 percent of the advisors say that new clients who had previously worked with brokers had portfolios showing evidence of performance chasing.
The most common problem with the portfolios of new clients was in an appropriate risk profile for client goals while other problems cited were ownership of mutual funds with very high expense ratios, too many proprietary products, overweighting in one stock, and overweighting in one sector.
Studies like this one are very good in measuring not only advisor sentiment but in uncovering problems in the portfolios of their new clients.
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