Advisers Have Different Concerns than Clients

In its latest “Financial Professionals Outlook,” Russell Investments found that 59% of advisers are optimistic about the markets, whereas only 7% believe their clients feel the same.

Russell’s survey illustrated that advisers are concerned that their clients’ lack of confidence in the capital markets will result in them not reaching their financial goals for retirement. Seventy-eight percent of advisers said that slow economic growth is the biggest concern of their clients, 61% said market volatility is most concerning, and 43% say their clients are most concerned that the “investment game” is rigged.   

Whereas clients are worried about a volatile market, advisers have different concerns. Sixty percent of advisers say that what concerns them the most is clients’ underfunding their retirement accounts. Fifty-four percent of advisers pointed to the federal budget deficit as concerning for their clients, and a slow pace of economic growth concerns 52% of advisers.   

“Our recommendation is for advisers to encourage their clients to focus on what is within their control and view the present situation in a broader time horizon,” said Phill Rogerson, managing director, consulting services for Russell’s Private Client Services business. “Advisers can take action to rebuild client confidence in the markets by having the right conversations to address fears and focus on the levers you can control–spending, income and investment.”

Despite this lack of confidence many advisers see in their clients, only a third (34%) of clients in or nearing retirement have made changes to their retirement plan.  Of those making changes, the strategies include:

  • Working longer/going back to work: 69%
  • Downsizing their expected standard of living in retirement in order to decrease expenses: 62%
  • Changing the investment strategy: 56%
  • Increasing their savings rates: 33%
  • Other (reducing debt, etc.): 11%

In the press release announcing the report, Russell said it found it most disparaging that only 33% of clients who thought of making a change in their retirement plan decided to increase their savings rate.