Together We Go

A survey by Natixis Global Associates found that investors with financial advisers show significantly higher levels of confidence, both in asset allocation performance and actions taken during the economic crisis.

Across all surveyed investors (age 44 and older), more than half (59%) reported satisfaction with the way their asset allocations have held up in the current market, and two in five (41%) investors expressed disappointment, according to the results of the Natixis survey. When comparing views of investors with financial advisers and those without advisers, nearly half (48%) of investors without advisers say they are dissatisfied with how their asset allocation has held up against the market, as compared with 38% of investors with advisers expressing this view.

According to a release of the survey results, overall, investors are overwhelmingly confident (84%) in the actions they have taken during the economic crisis. More investors with advisers (86%) expressed overall confidence in actions taken during the economic crisis than did their self-directed counterparts (81%).

Among the most frequent actions cited were: stayed the course and did not make any changes (54%), continued to invest as before the crisis (29%), and reallocated some of their portfolio into other similar investments (27%). Some, however, actually did cash out (15%).

Most respondents (81%) agreed that their adviser handled their situation “as well as one could ever expect’ under the circumstances. More investors with advisers (29%) than self-directed investors (21%) have taken steps in order to help take advantage of the recent market turmoil to reallocate some of their portfolio, according to Natixis. In fact, the vast majority (84%) of investors with advisers who reallocated did so based on advice from their adviser. Most respondents (81%) agreed that their adviser handled their situation “as well as one could ever expect’ under the circumstances.

“Our survey results appear to suggest that, overall, financial advisers have done a good job helping clients understand and negotiate the current environment,” said Tracey Flaherty, Senior Vice President of Retirement Strategy at Natixis Global Associates. “However, as our survey results show, advisers also have an opportunity to enhance their relationships with clients during these troubled times by providing regular contact, reassurance, an interpretation of market moves, and more advice on how their investment portfolios should be allocated.”

However, preparation for market volatility is one area where advisers do not get as high a grade, Natixis said. Although most investors with advisers (85%) have had at least one discussion annually about the potential impact of market volatility on investments, nearly a third (29%) indicated that their adviser did not prepare them to handle severe market volatility.

“Advisers should pick up the level of communication with clients, continue to set expectations for future market volatility, and consider new allocations to clients that may help them benefit from ongoing market volatility, while helping to protect asset levels,” Flaherty said.

As compared with pre-retirees, retirees are more satisfied with their advisers’ performance during the economic crisis and express greater faith in the advice they receive, according to Natixis.

Retirees report more frequent communication with advisers (43% versus 33% of pre-retirees) and greater satisfaction with expectation-setting with regard to investment performance (53% versus 41% of pre-retirees). More retirees than pre-retirees (69% versus 59%) strongly agree with the statement, “I know what my retirement savings are invested in and the reasons why the investments were chosen.”

“The results of our survey reveal an undercurrent of unease among pre-retirees, which is not surprising given that the extent of the market disruption is particularly challenging for Baby Boomers,” said Flaherty. “The Baby Boom generation is the first generation with primary responsibility for creating their own retirement income stream and, with longer life spans, they will spend more years in retirement, so concerns about outliving assets are top of mind.”

Among all pre-retirees, the mean expected retirement age is 64. More than a third (38%) of respondents have increased their mean retirement age from 62 since the financial crisis. More than half of pre-retirees (55%) said their expected retirement age has not changed since the start of the economic crisis.

According to the survey, more than half (58%) of those who work with an adviser have a written financial plan whereas the vast majority of self-directed investors do not (80%). Of those with a financial plan, most (96%) say it includes a plan specifically for retirement.