Wary Investors Brace For Market Volatility

Columbus, OH — The stock market began the second quarter of 2022 on a positive note, but it may not be enough to relieve investor worries. The seventh annual Advisor Authority study powered by the Nationwide Retirement Institute found the majority of investors (with investable assets of $100,000 or more) anticipate an increase in market volatility (61%) and are concerned about a U.S. economic recession (69%) over the next 12 months. According to another recent Nationwide Retirement Institute flash poll, more than half of respondents expect inflation to be long-term vs. transitory.

“Many investors predicted choppy waters in 2022, and at the moment it seems some of their concerns were not unfounded,” said Eric Henderson, president of Nationwide Annuity. “Despite a somewhat gloomy outlook, investors are vigilant. They are increasingly seeking the support of a financial professional and taking control of their finances. Lessons from past financial crises influence their often cautious, yet proactive approach today.”

When asked to identify how the past financial crisis that had the most profound impact on them changed their approach to investing, investors indicated they chose to manage investments more conservatively (20%), adopt a new strategy to protect assets against market risk (17%) and use the market decline as a buying opportunity (17%).

Advisor Confidence Benefits Investors Today

The good news is, after living through past financial crises, advisors and financial professionals have confidence in their ability to help clients weather the storm:

• Seven in ten (70%) financial professionals feel more confident about their ability to help protect their clients’ finances and investments should another crisis arise. This compares to only 44% of investors feeling more confident in their abilities.
• Seven in ten (69%) financial professionals feel more confident about their ability to help clients prepare for and live in retirement, compared to only 41% of investors.
• 66% of financial professionals feel more confident about investing their clients’ assets in the stock market, compared to only 38% of investors feeling confident in their abilities.

“Advisors and Financial professionals have navigated tough times in the past and that has helped them feel more confident in their ability to advise clients in moments like we’re experiencing now,” added Henderson. “They have a tremendous opportunity to not only calm nerves, but also offer new solutions that may help clients feel more protected from elements beyond their control.”

Advisors prioritize protecting their clients against market risk while planning for the future  

With investors taking a more proactive role in their financial futures, advisors are in a prime position to educate and guide clients, helping them balance the management of near-term market risks with long-term financial planning.

With market risk and volatility top of mind for investors, 93% of advisors and financial professionals currently have a strategy in place to help protect their clients' assets against market risk. Among those with a strategy, the solutions they would choose to protect clients include diversification (55%), fixed annuities (48%) and fixed indexed annuities (FIA) (46%).

For long-term planning, 92% of advisors and financial professionals have a strategy in place to protect clients against outliving their savings, with solutions ranging from Social Security (51%), dividend yield stocks (49%) and variable annuities with living benefit riders (48%).

At a time when the burden of saving for retirement is placed on the individual investor, professional financial guidance is critical. Fortunately, more than six in ten (63%) investors currently work with an advisor or financial professional.

“Advisors and financial professionals have a prime opportunity to begin fostering relationships with the 37% of investors who haven’t sought out professional guidance,” Henderson said. “The volatile first quarter we’ve just lived through may be just the wake-up call they need to start taking steps to protect their financial future.”

For additional insights on this survey data, visit https://nationwidefinancial.com/media/pdf/NFM-21870AO.pdf (PDF)

Nationwide’s seventh annual Advisor Authority study powered by the Nationwide Retirement Institute® explores critical issues confronting advisors, financial professionals and individual investors—and the innovative techniques that they need to succeed in today’s complex market. This is the fifth in a series of ongoing releases from the seventh annual study.

About Advisor Authority: Methodology
The seventh annual Advisory Authority Survey was conducted online within the United States by The Harris Poll on behalf of Nationwide from July 22 – August 17, 2021 among 1,632 advisors and financial professionals and 839 investors, ages 18+. Investors are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, household size, investable assets and propensity to be online to bring them in line with their actual proportions in the population. Respondents for this survey were selected from among those who have agreed to participate in Harris Poll surveys. Because the sample is based on those who were invited to participate in Harris Poll online research, no estimates of theoretical sampling error can be calculated.