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In Practice October 13, 2009
Less Investing Could Mean Less Business for Advisers
Some Americans are pulling back from investing—which potentially means fewer people will be in the market for a financial adviser, according to a survey from AlixPartners, a global business advisory firm.
Reported by Ellie Behling
Almost half (49%) of people surveyed who identified themselves as “previous investors” reported either having stopped or reduced investing in stocks or mutual funds, and 26% said they had no intention of investing in those vehicles in the next three years.
In higher-income households (those earning more than $75,000 a year), 21% of former investors said they ceased investing in stocks or mutual funds.
The results could mean a contraction of people in the market for retail financial services firms and financial advisers, according to AlixPartners.
“Financial-advisory firms therefore have two key challenges: to figure out who, really, is going to start investing again, and to win back trust by building into their offerings a level of oversight, due diligence, and risk management that will eradicate the possibility of similar meltdowns in the future,” said Clarence Hahn, co-lead of AlixPartners’ Financial Services practice.
The survey also found that some former investors are teetering about whether to invest in the future, representing an opportunity for savvy advisers and financial firms. While 26% said they have no intention of investing in the next three years, 27% are unsure whether they will invest in that same timeframe.
“The institutions that are able to develop the customer propositions to reverse this tide ultimately stand to gain from the fundamental shift that has taken place,” said Pierre Buhler, co-lead of AlixPartners’ Financial Services practice.
The survey was conducted in late August among 1,000 people in the U.S.