A Decade After the 2008 Financial Crisis, Advisors Say Investors Are Better Prepared for a Future Downturn
Louisville, KY – Ten years after the greatest financial crisis in a generation, more than six in ten (61%) Registered Investment Advisors (RIAs) and fee-based financial advisors say today’s investors are better prepared to make it through a future market downturn. This is in part due to a clear shift in the mindset of today’s investor compared to 2008, according to the results of a poll of more than 370 RIAs and fee-based financial advisors, conducted by Nationwide Advisory Solutions.
Nearly three-quarters of RIAs and fee-based advisors (74%) say investors today are more likely to work with a financial advisor than they were prior to the crisis. Advisors say investors are also more likely to listen to an advisor’s guidance (90%), more transparent about their financial situation (89%) and more willing to create and stick to a financial plan (84%). Investors are also more likely to ask about advice that is in their best interest or aligned with a fiduciary standard, according to 60 percent of advisors.
“Even a decade after the 2008 financial crisis, the most significant market downturn since the Great Depression has had a lasting impact on investors’ concerns about minimizing risk and protecting their assets, as well as their desire for guaranteed income in retirement,” said Craig Hawley, Head of Nationwide Advisory Solutions.
RIAs and fee-based advisors say investors today are more concerned about a future downturn (84%), more concerned about market volatility (79%) and more risk averse (67%). They are also more likely to focus on product costs (56%) and to ask about how advisors are compensated for their advice (51%), according to the advisors surveyed.
For their part, more than three-quarters (79%) of RIAs and fee-based advisors have increased their proactive communication with clients about market conditions while 60 percent have become more proactive about communicating their compensation model. The majority (57%) of advisors also increased their focus on an independent fee-based approach to managing their practice and serving their clients.
“RIAs and fee-based advisors have adapted to the needs of the post-financial crisis investor by adopting a more holistic approach, aligning the products and tools they leverage to meet investors’ concerns and proactively communicating about market risk and movement,” explained Hawley.
According to the poll results, following the financial crisis nearly 73 percent of RIAs and fee-based advisors increased their focus on holistic financial planning for clients. Advisors say clients are more likely today than they were prior to 2008 to seek guaranteed retirement income (64%) and guaranteed downside protection (62%), to hedge against market risks. As a result, RIAs and fee-based advisors have increased their use of specific investment products in order to meet investors’ retirement income goals, including 56 percent increasing their use of dividend-yielding stocks, 41 percent increasing their use of yield-generating ETFs and 37 percent increasing their use of variable annuities with guaranteed living benefits. To hedge against market risk, RIAs and fee-based advisors say the top three products which they are using more since 2008 include liquid alternatives (45%), fixed index annuities (FIAs) (43%) and fixed annuities (31%).
While RIAs and fee-based advisors agree investors today in general are better prepared for future downturn than they were prior to 2008, a plurality (28%) see Baby Boomers as best-prepared to handle a downturn. As they seek to prepare investors to handle future down markets, advisors are prioritizing educating clients about market cycles (63%), focusing on holistic financial planning (57%), and adding annuities to provide both guaranteed income (28%) and guaranteed downside protection (28%).
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor’s. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.