Preparing for a possibly imminent rate hike and generating investment income in a low-return environment are among the top concerns of financial advisors and their clients, according to the Eaton Vance’s most recent Advisor Top-of-Mind Index survey.
The quarterly survey, released Tuesday, is part of an ongoing study that measures the overall importance of key issues facing financial advisors and their clients.
“One of the, in my opinion, long-term best ways to add value as a financial advisor is making sure you are managing to the needs of the client [and] addressing some of these issues,” said John Moninger, managing director of retail sales at Eaton Vance, during a visit to ThinkAdvisor’s New York office. “But also you’re making sure that client is keeping as much of that return in their pocket through tax minimization strategies.”
The study surveyed 1,006 financial advisors from around the country, representing a cross section of advisors including independent, wirehouse and private bank advisors. The survey was conducted online from June 18 through July 10.
According to Eaton Vance’s survey of financial advisors, these are the four concerns on the top of advisors’ minds:
1. Anxiety Over Rising Rates
According to the survey, nearly three-quarters of advisors report at least some concern about a near-term increase in rates, and 1 in 5 say they are very concerned.
“When asked, though, when do you think rates are going to go up, [there’s] a little bit of a disconnect from what we saw the market pundits or even the media talking about,” Moninger told ThinkAdvisor. “Roughly 42% of the advisors indicated that they thought it would be the first half of ’16, not necessarily September or even later on in the year.”
Moninger says this is especially interesting as the survey was conducted in July before the market’s recent turmoil.
Another 38% of advisors expect a move will come in the second half of 2015, according to the survey.
As Fed action possibly looms, many advisors are already taking measures to prepare their clients for rising interest rates. According to the survey, 34% of the advisors have already taken action.
Meanwhile, another 47% are taking their time. According to the survey, these advisors report they are currently in the process of adjusting portfolios on their clients’ behalf.
“And it kind of makes sense,” Moninger said. “If you go back to ’13 … we believed in the market that rates had the potential in ’13 to go up; they never did. Advisors are a little more skeptical this time.”
2. Opportunity in Volatility