Advisors' optimism far outstrips their clients', according to a report released Wednesday by Russell Investments. Nearly 60% of advisors reported feeling optimistic about the future of capital markets, but said just 7% of their clients agreed. Furthermore, while only 13% of advisors said they were pessimistic, 45% said their clients were pessimistic.
Phill Rogerson (left), managing director of consulting services for Russell’s Private Client Services business, noted that while the results weren't unexpected, the magnitude was a surprise. He suggested advisors' experience in the industry was a likely reason for their confidence.
"Generally, advisors take a longer term view and aren't caught up in the moment," he said. Investors, however, are stuck "fighting the last battle," and end up buying equities when they're expensive, and selling them when they're cheap.
"Advisors are disciplined enough to not be concerned about what's going to happen in 2010 or 2011, but to look at the aggregate of 2010 to 2015," he said.
Advisors and clients have different ideas about what is holding clients back, as well. Over three-quarters of advisors said their clients believe the biggest threat against them is economic uncertainty and slow growth. Advisors disagreed, and 60% say underfunding is the biggest obstacle clients have to face. Just over half of advisors said slow economic growth was the biggest obstacle their clients face, after underfunding, and the federal deficit (54%).
Market volatility ranked high among clients; 61% of advisors said their clients though this was their biggest obstacle. Another big threat facing clients may be harder to address; 43% said their clients' "cynicism" and belief that "the game is rigged against the little guy" are the biggest obstacles they face. Advisors agreed that client behavior is an obstacle; 49% said their clients' "unwillingness to accept sufficient market risk" was preventing them from meeting return objectives.