Sixty-six percent of investors and fifty-six percent of registered investment advisers (RIAs) and fee-based advisers expect the markets to become more volatile over the next 12 months, according to the “Advisor Authority Study” commissioned by Nationwide Advisory Solutions and conducted online by The Harris Poll.

For the first time in four years, investor and adviser optimism both declined at the start of 2019, with 55% of investors optimistic and 66% of advisers optimistic. This is a drop of seven percentage points for investors and 11 percentage points for advisers from the year prior.

“More than a decade after the Financial Crisis of 2008, concern about volatility is again top of mind for advisers and investors alike, and uncertainty is on the rise,” says Craig Hawley, head of Nationwide Advisory Solutions. “Our latest Advisor Authority special report uncovers the key factors that RIAs and fee-based advisers need to understand investors’ top concerns, confront the complex dynamics of a challenging market and create the ‘safe haven’ investors seek—unlocking greater loyalty and attracting new clients to drive greater growth.”

Asked what their financial concerns are, investors say the cost of health care (33%), taxes (31%), protecting assets (27%), saving enough for retirement (23%) and inflation (16%). Asked what they think are their clients’ concerns, advisers say the cost of health care (27%), followed by taxes, protecting assets and saving enough for retirement—all in a three-way tie at 26%. That is followed by rising interest rates (24%).

Twenty-eight percent of investors say that market volatility keeps them up at night. Asked what they think is causing volatility, 45% say gridlock in Washington, D.C., 38% say global instability, and 32% say U.S. economic performance. Advisers say it is interest rates (33%), gridlock and U.S. economic performance (both tied at 30%) and global instability (29%).

Investors’ concerns over volatility may be why 62% are working with an adviser, up from 51% in 2016.

In 2018, investors were more optimistic, which Nationwide attributes to the tax cuts, fewer regulations and a business-friendly majority in both the House and the Senate. But that optimism has declined in 2019, which Nationwide says may be due to the growing partisan divide, the less promising reality of tax reform and an escalating trade war with China.

Fifty-eight percent of investors and fifty-four percent of RIAs and fee-based advisers are worried that the U.S. economy could fall into a recession in the next 12 months. Fifty-four percent of investors and fifty-six percent of advisers are worried that there could be a bear market in the next year.

Among those investors not working with an adviser, 54% say market volatility might prompt them to do so. Asked what they view as the benefits of working with an adviser, 21% say helping them stay focused on long-term goals, and helping them make informed decisions and protecting their assets against market risk, both tied at 20%.

Eighty-eight percent of advisers say they have a strategy to protect their clients’ assets against market risk, while 65% of investors say they have such a strategy.

Asked what is the best way to mitigate market risk, 63% of investors and 62% of advisers say it is diversification. They are more divided when it comes to fixed annuities (30% versus 53%, respectively), fixed index annuities (23% versus 48%) and liquid alternatives (26% versus 44%).

The findings are based on a survey of 1,021 advisers and 834 investors conducted February 15 to March 4, 2019.