Advisers Focused on Asset Allocation

Market volatility and questions about interest rates have brought asset allocation and portfolio management to the forefront for financial advisers, according to a Fidelity Investments survey.

Adviser concerns about market volatility and limiting downside risk peaked during January 2014, a period of time in which the S&P 500 Index experienced its worst monthly decline since May 2012, according to the Fidelity Advisor Investment Pulse survey.

Today about 20% of financial advisers say they are strongly concerned about volatility, Fidelity says. This is down from about 32% at the start of the year, but up from about 15% in the third quarter of 2013, when U.S. equity markets were performing strongly.

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Asked to list their most pressing concerns, financial advisers most often shared the following:

  • Portfolio management and investment allocation;
  • Bonds and fixed-income investments;
  • Market volatility and avoiding potential meltdowns;
  • Interest rate risk; and
  • Finding yield and generating income.

Many financial advisers spent the first quarter of 2014 thinking about what to do with client portfolios if interest rates rise, explains Scott E. Couto, president of Fidelity Financial Advisor Solutions, which provides mutual funds and other investment products to advisers. Interestingly, advisers and their clients have been less focused on what many consider to be the flip side of rising rates, inflation, he says.

More on the survey results is available here.

Demand, Costs Both Up for Summer Travel

Even though the cost of travel is up from last year’s figures, bookings are also up, according to an American Express Travel survey.

The financial services firm polled 300 travel counselors, and nearly half note an increase in bookings for summer travel. Most of the counselors (67%) say costs are also higher than last year’s. Rising costs in key travel categories, such as airfare and hotel stays, are cited by American Express Travel’s experts as main reasons for pricier summer travel. More than a third (35%) say costs are up because customers want to spend more on amenities such as excursions and other activities.

The top 10 summer hotspots are London; Paris; Rome; Orlando, Florida; New York City; Kahului, Hawaii; San Francisco; Cancun; Los Angeles; and Honolulu.

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Some travelers want to be ahead of the herd, and are traveling to such destinations as Brazil and Milan. Santorini, a Greek island in the southern Aegean, and Romanian capital Bucharest are also among fast-growing summer destinations for 2014. Domestically, people are heading to Hilton Head, South Carolina; and Grand Junction, Colorado.

Nearly half of travelers (43%) seek relaxation as the top feature in a vacation, and about a third (34%) say they’d like to experience cultural immersion. Nearly a third of travel counselors say clients are booking cruises. Most counselors (81%) are planning vacations for clients and their immediate family.

Most summer vacations last 10 days. Among other findings, traveler counselors say:

  • Customers want added value, such as upgrades (33%);
  • Destination is most important to customers (26%);
  • Budget is customers’ top consideration (20%);
  • Customers want relaxing experiences, such as an all-inclusive beach vacation (43%);
  • They are curating trips for multi-generational families (35%); and
  • They are planning experiences for their clients who will travel with friends or a significant other (29%).

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