10 years after the greatest financial crisis in a generation, more than six in 10 (61 percent) registered investment advisers (RIAs) and fee-based financial advisers say today’s investors are better prepared to make it through a future market downturn, according to the results of a poll of more than 370 RIAs and fee-based financial advisers, conducted by Nationwide Advisory Solutions.
Nearly three-quarters of RIAs and fee-based advisers (74 percent) say investors today are more likely to work with a financial adviser than they were prior to the crisis. Advisers say investors are also more likely to listen to an adviser’s guidance (90 percent), be more transparent about their financial situation (89 percent) and be more willing to create and stick to a financial plan (84 percent). 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 advisers.
“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 advisers say investors today are more concerned about a future downturn (84 percent), more concerned about market volatility (79 percent) and more risk averse (67 percent). They are also more likely to focus on product costs (56 percent) and to ask about how advisers are compensated for their advice (51 percent), according to the advisers surveyed.
For their part, more than three-quarters (79 percent) of RIAs and fee-based advisers 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 percent) of advisers also increased their focus on an independent fee-based approach to managing their practice and serving their clients.
“RIAs and fee-based advisers 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 advisers increased their focus on holistic financial planning for clients. Advisers say clients are more likely today than they were prior to 2008 to seek guaranteed retirement income (64 percent) and guaranteed downside protection (62 percent), to hedge against market risks. As a result, RIAs and fee-based advisers 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 advisers say the top three products they are using more since 2008 include liquid alternatives (45 percent), fixed-index annuities (FIAs) (43 percent) and fixed annuities (31 percent).
While RIAs and fee-based advisers agree investors today in general are better prepared for future downturn than they were prior to 2008, a plurality (28 percent) see Baby Boomers as best-prepared to handle a downturn. As they seek to prepare investors to handle future down markets, advisers are prioritizing educating clients about market cycles (63 percent), focusing on holistic financial planning (57 percent), and adding annuities to provide both guaranteed income (28 percent) and guaranteed downside protection (28 percent).
The Financial Crisis 10-year Anniversary Poll was conducted online within the United States by Nationwide Advisory Solutions in August 2018 among 372 RIAs and fee-based financial advisers drawn from the company’s internal database of financial adviser partners.
