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Financial Professional Outlook

Posted: July 29, 2014

Russell's Financial Professional Outlook is a survey of financial advisors that provides a view of advisors' insights on topics of importance to their businesses and the industry. In the latest survey, Russell collected the opinions of 150 financial advisors working for 80 national, regional and independent advisory firms nationwide.

The latest survey examines where advisors could use the most help in their practices, the kinds of clients they want to attract and where they think the markets would end the year. Check out some of the highlights from the latest survey or download the full report.

Interest in information and resources to help you:

With respect to client acquisition, do you wish you had more information and resources to help you?

Net spenders versus net savers.

Preparing for the next generation of investors.

When it comes to client acquisition, we were surprised to see where advisors are choosing to focus. Most of their efforts are closer to the net spending side of the scale versus the net savers. Nearly three quarters (72%) of respondents said they wanted more resources to help them acquire clients near or in retirement (net spenders). Only 39% are looking to the other end of the continuum (net savers) to gain clients.

In between, advisors said they’d like help acquiring clients in peak earnings years (70%), women investors (55%) and clients with specific tax needs (45%).

For more information, download the latest Financial Professional Outlook.

The power of positive thinking.

This quarter advisors remained strongly positive, with 82% feeling optimistic about the equity markets looking out over the next three years. Advisors said clients lagged far behind them, with just 25% optimistic. Both advisor and client sentiment slipped 5 points from last quarter, but this was not a meaningful amount in our view. The overall theme remains the same, though: Advisors are bullish, clients are uncertain.

Market sentiment compared with the Russell 1000® Index

In general, how optimistic or pessimistic are you about capital markets over the next 3 years? What about your clients?

Sentiment Index* Trend: Advisor vs. Investor

* The Sentiment Index provides a point-in-time measurement of advisor and investor sentiment about capital markets over the next three years. The Sentiment Index takes into account both those who are optimistic and those who are pessimistic, and is calculated in this way: Sentiment Index = (% of group that is optimistic) – (% of group that is pessimistic).

This chart was created by asking advisors to indicate how optimistic or pessimistic they are about the capital markets looking out over the next three years, on a 5-point scale of "extremely pessimistic to extremely optimistic." Then we asked them to gauge the sentiment of their clients on the same scale.

For more information, download the latest Financial Professional Outlook.

Where’s all this volatility investors keep talking about?

According to the VIX, volatility has been a no-show in the equity markets lately, but advisors say it’s alive and well in their conversations with investors. Just like last quarter, advisors said the top two investor-initiated conversations were market volatility (54%) and concerns with government policy (53%). Those were followed by global events (35%) and running out of money in retirement (34%).

It was a repeat performance for advisor conversations, too. They continued to focus on the same topics, in the same order: portfolio rebalancing (48%), performance (43%) and running out of money in retirement (30%).

It’s hard to know for certain why investors seem fixated on volatility. Obviously the markets have had quite a run over the last few years and there is plenty of chatter in the press about a pullback. Yet the market’s low volatility levels seem to ignore that possibility, at least for now.2

What advisors and investors are talking about

When thinking about conversations you've had with your clients over the past three months, which of the following have been the most common topics of conversations initiated by you? Initiated by your clients? (up to three responses)

2 http://www.bloomberg.com/news/2014-06-26/frenzy-of-volatility-bets-underpin-lowest-vix-since-2007.html

For more information, download the latest Financial Professional Outlook.