Financial advisors appear to be split on the potential performance of the markets for the rest of the year as the vast majority report that their clients’ portfolios are down for the year.
Seventy percent of the 799 financial advisors surveyed by InspereX in June said their clients' portfolios were down 1% to 14% on average.
Around 21% percent of the respondents said their clients' portfolios were down 15% to 24%.
Five percent said their clients' portfolios were up without identifying by how much, while 3% said their clients' portfolios were flat.
On the plus side, 85% of the respondents said their clients are only down on gains in their portfolios, not on the principal. And 69% said their clients are now more comfortable with volatility than they were before.
At the same time, however, 30% of the respondents said their clients are discussing putting off retirement as a result of the market downturn.
Nonetheless, 37% of the respondents believe markets will close even on the year, 12% expect a return of 10%, and 1% expect a gain of 20%.
That said, 39% of the respondents expect a drop of 10% and 11% a decline of 20% or more.
The survey was conducted online by Red Zone Marketing. The respondents included advisors from wirehouses, independent broker-dealers, banks and registered investment advisor firms. InspereX is the tech-driven fixed income and market-linked product distribution and trading firm formed from the merger of Incapital and 280 CapMarkets in July 2021.
In a survey conducted late last year, by comparison, InspereX found that 4% of advisors were anticipating a 10% rise in the market this year and 28% predicted a flat market while 13% thought the markets would drop 10% or more — and 95% of advisors thought that 2022 could bring several market corrections.
“The overwhelming majority of financial advisors we surveyed last year expected to see heightened volatility in 2022, which has seemingly helped them prepare portfolios and clients for the turbulent environment we’re experiencing today,” Chris Mee, managing director and head of market-linked products distribution at InspereX, said in announcing this year’s survey results.
When asked how they are positioning portfolios for income-oriented clients, 100% of the respondents said they are considering alternatives; 36% said they are introducing clients to individual bonds for protection of principal and predictable income, subject to the credit risk of the issuer; 29% said they are using individual municipal bonds; and 28% said they were avoiding bond exchange-traded funds and funds where there is no guaranteed return on principal.
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