As volatility erodes investor confidence in the markets, advisors are increasingly in the best position to help their clients juggle retirement worries with a better understanding of how alternatives can help them build risk into their portfolios, says a Natixis survey released on Wednesday.
Half of investors, 51%, said they would consider alternative investments for their portfolios if their advisors recommended them, yet only 35% said they had discussed alternatives with their advisors, according to the online survey of 702 individual investors conducted in May and June for Natixis by CoreData Research.
Cash Is Still King to Many
At the same time that investors are hungry to learn more about alternatives, a surprisingly large number of the people surveyed, 57%, said they were not reducing the proporation of cash investments in their portfolios. That majority included less affluent households as well as younger investors with a longer time horizon.
“Individual investors are very concerned about having enough assets to live in retirement and meet their overall financial goals, but they’re only willing to take on minimal investment risk, so a lot of them are still in cash or on the sidelines,” said David Giunta, president and CEO of Natixis Global Asset Management—U.S. Distribution, in a phone interview on Monday.
At the same time, investors surveyed said they were willing to consider new asset allocation and diversification strategies to address their fears. Because of the complexity of alternatives, advisors are best positioned to educate their clients about them, Giunta (left) said.
“What we’ve been talking about with our advisor clients is durable portfolio construction, which involves targeting a certain amount of risk that would make clients more comfortable riding through the ups and downs of the marketplace,” he said. “The survey results were very consistent with what we’ve been hearing from advisors.”