Advisors Break Out Champagne, Are Bullish on 2015

SEI Advisor Network counsels contingency planning for ebullient group

Ninety-six percent of advisors said they were optimistic or excited for the year ahead, a survey found. Ninety-six percent of advisors said they were optimistic or excited for the year ahead, a survey found.

The Dow’s performance in 2014 probably has something to do with it, but advisor optimism is at euphoric levels, with 96% either optimistic or excited about the year ahead.

Of course, since the SEI Advisor Network survey of 463 advisors did not probe advisors’ reasons, one can only speculate that the Dow Jones Industrial Average reaching an all-time high of just under 18,000 is part of the reason for the ebullience with which advisors are anticipating the new year.

But with nearly 85% expecting the markets to be as good or better in 2015 than in 2014, the question arises: Do you bring out the Château Lafite Rothschild, or might a Laurent-Perrier brut champagne be more appropriate?

Another, wiser-seeming approach is that advocated by SEI Advisor Network’s senior vice president Steve Onofrio, who suggests that today’s buoyant market provides the ideal opportunity for advisors to contact clients to discuss contingencies for a market reversal. 

“These periods of positive market momentum are the perfect time to reassess clients’ progress towards goals and develop strategies in the event of a market pullback,” Onofrio said in a news release announcing the survey.

Confirming the relevance of that advice, the survey indicates that clients do not mirror their advisors’ level of enthusiasm. Nearly a quarter of advisors surveyed said their clients were generally more pessimistic and reactionary to market events than they were in 2013.

Perhaps that wall of worry is harder for ordinary investors to climb than advisors whose primary incomes derive from the ascent.

Indeed, in line with rising market expectations, advisors surveyed expected their own businesses to expand in 2015, with 72% expecting growth over 5% and a third of advisors anticipating very large expansion in the 10 to 15% range.

But handling that growth aroused greater anxiety among the otherwise upbeat group of respondents, with close to 40% identifying finding the right client as their biggest challenge.

To Onofrio, who supports some 5,000 SEI-affiliated advisors with practice management guidance, the solution to this advisor concern lies in proper client segmentation.

“Segmenting by client needs and goals allows advisors to create tailored communications and provide more relevant service offerings, rather than taking a one-size-fits-all approach,” the release quotes him as saying.

Going forward, advisors in high numbers see retirement planning (86%) as a key area they will add value in the coming year, and three-quarters plan to do more to incorporate technology into their practices.

The advisory business remains high-touch, with a majority of advisors (61%) still relying on in-person meetings and phone calls to reach out to clients rather than email, which is rising in popularity among a smaller but expanding cohort of advisors (37%).

--- Check out Rodriguez, Faber, Arnott: Research’s 2015 Prediction Panel on ThinkAdvisor.

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