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Managed Accounts Boost Investor Confidence, Fidelity Reports

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Three-quarters of investors in a new survey by Fidelity Investments expressed confidence that professional management would help them meet their financial goals.

The survey found that the benefits of professional money management accrued even to those without a complicated portfolio; only 10% of respondents described their financial needs as very complex.

The findings were based on an online survey conducted by ORC International in late October among a sample of 400 respondents ages 25 and older who had $5,000 or more in a managed account.

Eighty-nine percent of investors surveyed said that a managed account simplified their investing, and cited these main benefits:

  • Having confidence my portfolio is properly diversified: 48%

  • Being able to talk to a financial professional about my investments: 40%

  • Having confidence that I’m on track to meet my investing goals: 36%

“Working with a professional money manager can benefit even the most seasoned investors by taking the emotion out of their financial decisions,” Fidelity’s head of managed accounts Rich Compson said in a statement.

“We hear time and again from investors — particularly nervous ones — that a managed account has helped them stay properly allocated during stressful times when they otherwise would have overreacted, like in volatile markets.”

Leaving DIY Behind

Investors in the survey had various reasons for moving from do-it-yourself investing to a professionally managed account. Thirty-one percent cited their lack of skill, desire or lack of time to manage their own investments.

Twenty-three percent said they wanted a professional to tell them what to do, and 22% said they were prompted to seek professional management by a life event.

Respondents of all ages said a family member or friend, a financial advisor or their company’s retirement plan introduced them to a managed account.

Survey participants started investing on average around age 30, often triggered by a pivotal life event. Twenty-five percent said they did so upon marrying, 18% because of a change in job status and 17% following the birth of a child.

Seventy-two percent of baby boomers in the study said they had invested in a managed account for more than 20 years.

Boomers on average held 77% of their total investable assets in a managed account, compared with 62% for Gen Xers and 64% for millennials.

Fidelity’s survey found that 69% of respondents invested in traditional managed accounts. At the same time, about a quarter of respondents have adopted technological advances by leveraging both a traditional managed account and a robo-advisor one.

Six percent said they owned only a digital advisor account, a number Fidelity said was likely to grow in coming years.

Half of respondents using robo-advisors said they decided to go digital because of ease of use, while 41% cited low cost and 36% trust in a firm’s brand strength.

“As technology permeates every part of our lives, new innovations, such as robo-advisors, have democratized managed accounts, providing greater access to professionally managed accounts at a lower cost,” Compson said.

“Today, investors can select an investing option based on the degree to which they want control over their day-to-day investments and the complexity of their financial situation. This is the era of investor choice.”

A recent study found a disconnect between investors’ growing interest in robo-advisors and advisors’ perception of their interest. For their part, advisors are under increasing pressure to embrace technology.

Last summer, Fidelity rolled out a robo platform called Fidelity Go for retail investors.

And last month, it introduced the PAS Defensive Strategy Preference, which was designed to help buffer against market volatility in an effort to provide a consistent experience for investors over the long term.

Fidelity noted that market ups and downs or lingering anxiety because of the 2008 financial crisis was a major reason about a third of the survey respondents cited for opening a managed account.

— Check out Millennials Are Top Savers, but Not for Retirement on ThinkAdvisor.