Financial advisors stand to gain new clients from the current upheaval in the market, as well as properly positioning their existing clients for the next phase of it, according to a recent report.
Demand for each type of advisor — except for those that have the greatest discretion over client assets — rose following each of the three “notable” volatility spikes over the past decade, as measured by the CBOE Volatility Index, Cerulli Associates writes.
Moreover, last year self-directed investors said for the first time that they wanted additional financial advice, according to the company.
“For advisors, this can be an excellent opportunity to get in front of possible new clients by distributing timely information and knowledge about both the markets and the current situation to properly contextualize events,” Cerulli research analyst John McKenna said in a statement.
“It also presents an opportunity to approach clients already in a formal relationship about long-term planning to ensure they will be in an advantageous position in the long run," he added.
Advisors also have an opportunity to properly align their clients’ portfolios in the current environment, according to the research firm.
Two months before the start of the Covid-19 pandemic, only 6% of investors expected to decrease their investments, and that rose to only 10% by April 2020, according to Cerulli.
During the same period, an average of 40% of investors expected to make net increases in their investments, and around the time the market began peaking, in November 2021, 47% of investors planned to make increases, according to the report.
“Establishing long-term plans remains crucial for both advisors and clients, but in the short and medium term, tools such as tax-loss harvesting and risk re-adjustment could be critical to help ensure clients can enter the next market upswing in as strong a position as possible,” McKenna said in the statement.
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