Advisors Dealing With A Daily Juggling Act

By Cyril Tuohy

InsuranceNewsNet    

A survey of financial advisors by Natixis Global Asset Management finds that, in many cases, clients are pulling them in opposite directions. Advisors also say they spend twice as much time on administrative tasks as they do looking for new or younger clients.

According to the survey, advisors complain of balancing the volatilities of stock and bond markets, the opposite needs of young investors and retirees, important differences in traditional and alternative investment strategies, and changing client preferences.

“U.S. advisors face a juggling act every day as they work to serve the rapidly changing needs of both their older and younger clients,” John T. Hailer, chief executive officer of Natixis Global Asset Management in the Americas and Asia, said in a news release. “Not only do they need new, more innovative strategies for managing retirement assets, they’re also looking for updated techniques to manage risk and return for younger investors.”

A total of 56 percent of advisors surveyed said it’s difficult to build portfolios that can reduce risk and boost returns, and 53 percent said it’s challenging to balance the drawdown for retirees while keeping those same portfolios growing.

Advisors, though, are not alone. Clients themselves are conflicted between generating higher returns and preserving capital, according to 74 percent of advisors surveyed.

The findings are part of the latest survey of financial advisors released by Natixis’ Durable Portfolio Construction Research Center. The survey results are based on online interviews conducted during August and September with 1,300 financial advisors worldwide, of which 150 were in the U.S.

A total of 69 percent of advisors – a 22 percentage point increase over last year – also said there was a need to replacetime-tested diversification and portfolio construction techniques with new approaches to keep returns comparatively high while at the same time preserving principal.

For all the attraction to alternative investments to boost returns, advisors also find it difficult to explain such investments to clients and only 25 percent of advisors use alternative strategies. They use them mostly with high net worth clients, the survey found.

Advisors shy away from alternatives because clients find them too difficult to understand, or because they are too risky, expensive, or simply are unfamiliar with them, the survey found.

“These findings clearly show it’s time to simplify the way we talk about alternatives and portfolio construction,” Hailer said.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].