Close Close

Portfolio > Portfolio Construction

Amid Volatility, Portfolio Management Is Top Advisor Concern: Fidelity

Your article was successfully shared with the contacts you provided.

Advisors have become more concerned about portfolio management since the middle of 2015, according to Fidelity’s Advisor Investment Pulse survey, as market volatility has increased. A quarter of advisors said it was their top concern in the fourth quarter; respondents in the third quarter also listed it as their top concern.

Fidelity stressed the importance of considering multiple time horizons in a client’s portfolio, something many advisors may not be doing as they focus either on a tactical approach (viewing portfolios on a one- to 12-month horizon) or a secular one (10 to 30 years).

“In reality, because markets are dynamic, an investment approach that works for one time horizon may potentially deliver a very different result for another,” Scott Couto, head of distribution for Fidelity Institutional Asset Management, said in a statement. “Advisors may find it useful to frame their portfolio discussions with clients around multiple time horizons.”

Couto added that advisors who are already considering multiple time horizons in their clients’ portfolios should also consider the impact of the business cycle on risk. Over a one- to 10-year time frame, asset performance is tied to market factors like corporate earnings and credit growth, according to Fidelity.

Interest rates, market volatility, finding yield and changes in the regulatory and macroeconomic environment all rated highly as top concerns in the survey as well.

“Interest rates dominated business headlines for much of Q4, with the Fed moving to raise rates in December,” Couto said.

“That said, there were other important influences toward the end of last year and coming into this year,” including market volatility and, of course, the Department of Labor’s new fiduciary rule.

The DOL sent its final rule to the Office of Management and Budget on Jan. 29. Bills that would replace the rule, which is still under review and could be released as early as April, have already been approved by the House Committee on Education and the Workforce, including the Affordable Retirement Advice Protection Act and the Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act, Melanie Waddell reported in early February.

“To make sense of the range of factors in play, many advisors are choosing to take a holistic, client-centric view. They want to understand how all these factors could affect their clients’ portfolios, and they want to be able to explain the potential impact to their clients,” Couto said.

— Read Senator Enters Race to Kill DOL Fiduciary Rule on ThinkAdvisor. 


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.