Data & Research May 22, 2014

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.
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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.

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.

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