Unpredictable Market Conditions Challenge Advisers

Most advisers (95%) believe their investment strategies will help clients meet retirement income needs, despite the challenges of managing volatility and generating sufficient income for current retirees.

“The current low-interest-rate, high-volatility environment makes it difficult for investors to achieve their retirement goals,” said John T. Hailer, president and chief executive officer of NGAM – The Americas and Asia, whose firm released a survey today. “It’s encouraging that so many advisers believe they have the tools and strategies to help clients navigate these challenges, but most advisers know there’s still a long way to go, in terms of building more durable portfolios.”

Client Concerns  

The majority of advisers (81%) say clients continue to be concerned about the long-term durability of their assets, including meeting their retirement income goals, outliving their assets (81%) and continuing declines in value of the real estate they own (59%).

“Americans are no longer in denial about real estate values, and they recognize how this impacts their financial well-being, particularly in retirement,” said Hailer. “When real estate values decline, as they have during the past several years, this has a dramatic impact on financing retirement, and Americans realize that.”

Market Volatility Raises the Stakes for Advisers  

Four in five advisers (81%) also reported that it will be difficult to effectively manage volatility risk for those in retirement, with four in 10 (41%) saying it was “extremely difficult.”

But advisers are confident over the long term. “Advisers recognize they have the tools to build portfolios that can weather market volatility,” said Hailer. “The challenge lies in educating clients about the need to make smarter use of traditional asset classes and embrace alternative investments, commodities, hedged equities and other investments that can reduce risk in a portfolio.

“The survey findings underscore the importance of advisers and other financial professionals providing their clients with the information and tools they need to make sound decisions about their personal savings objectives, risk tolerances and retirement goals.”

Advisers Oppose Scaling Back 401(k) Incentives  

In the area of public policy, 81% of advisers oppose proposals in Washington to scale back retirement savings incentives for 401(k) plans.

The survey, which was conducted in March, is based on online responses from 163 advisers at 150 advisory firms that collectively manage about $670 billion in assets.