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Financial Professional Outlook

Posted: November 13, 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 234 financial advisors working for more than 100 national, regional and independent advisory firms nationwide.

The latest survey examines how advisors go about generating sustainable income for clients in or near retirement. How do they deal with challenges like volatility and low interest rates? And how well do they really know their clients? 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?

Retirement planning presents no shortage of challenges for advisors.

More than half of advisors surveyed (52%) said that setting reasonable spending expectations was their top challenge in serving clients near or in retirement. That was followed by maintaining sustainable plans (44%), determining a sustainable spending policy (33%) and maintaining a scalable service model (26%).

None of this surprised us. But it does illustrate the numerous and ongoing challenges facing advisors as they search for sustainable income for their clients. It's just not easy in today's low interest rate environment.

For more information, download the latest Financial Professional Outlook.

A slight shift in advisor sentiment.
A more significant move for investors.

Advisors optimism fell four points since the June 2014 Financial Professional Outlook survey, with 78% of advisors feeling optimistic about the capital markets looking out over the next three years. That's still a solidly bullish number. However, November tends to represent the lowest readings in advisor optimism over the history of the Financial Professional Outlook, and this year is no exception (see the second chart below).

Surprisingly, 32% of advisors said their clients were optimistic this quarter. That's a 7-point improvement over the previous quarter's 25% optimistic, and relatively high, historically. We also saw the optimism gap narrow by 11 points, to 46%. Given the increase in market volatility in September and October, these shifts are interesting and may be worth watching going forward.

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?

The Volatility Index (VIX) spiked to its highest level of the year, closing at 26.25 on October 15, 2014 (intraday it was as high as 31.06). And wouldn’t you know it - advisors said market volatility was the top topic of investor-initiated conversations in recent months (47%), followed by portfolio performance and concerns with government policy (tied at 29%) and global events (27%). It's worth noting that advisors have told us all year that market volatility has been the top investor concern, although it was a bit higher in the previous two quarters at 55% in April and 54% in July.

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)


For advisors, their top two conversations topics were pretty typical: portfolio rebalancing (43%) and portfolio performance (32%).What's different this time around is that market volatility was the third most popular advisor-initiated conversation at 27%.

This is a first. Market volatility has never made it to the top three conversations for advisors. Are advisors just trying to beat investors to the punch? Or could they be onto something? We’ll have to keep an eye on this to see if a broader trend develops. From our perspective, it is not surprising to see volatility pick up now that the markets are in the process of digesting the eventual – and likely gradual – increase in interest rates.

For more information, download the latest Financial Professional Outlook.