The financial crisis, with its steep market drops, repressive 0% interest rates and wall-of-worry ascent that has caught so many investors off guard, may have claimed one more unnoticed victim along its path of destruction: advisor confidence in traditional investing approaches.
A new study of U.S. advisors by Natixis Global Asset Management, released Wednesday, suggests that advisors are questioning long-held investing values, perhaps like populations gung-ho to fight in World War I adopted more pacifistic views after all the carnage.
A key finding of the report is a loss of faith in buy and hold. While advisors understand that “no financial advisor can accurately and consistently time the market,” a significant majority (63%) question the value of data underpinning the strategy; this perhaps echoes the restlessness of their clients, 77% of whom question the approach.
Similarly, just 38% of advisors maintain the traditional view that time smooths out the investment volatility and risk of holding stocks, compared with 40% of advisors who are unsure and 23% who reject this view.
The rejection of buy and hold is more pronounced (59%) among advisors catering to affluent investors compared with those (40%) serving mass-market clients.