Advisors are now more concerned about government policies and the economy, portfolio management and volatility than they were in the first quarter, according to the Fidelity Advisor Investment Pulse survey for the second quarter.
“The best advisors are looking at high equity values and low volatility, focusing on making sure portfolios are diversified and talking about investment plans and goals with clients so they don’t overreact if patterns reverse,” says Robert Litle, head of Intermediary Sales at Fidelity Institutional Asset Management.
They’re reacting to investors’ concerns about a potential pullback given the strength of the markets and low volatility, Litle tells ThinkAdvisor.
What advisors are far less concerned about compared with previous quarters are rising interest rates, according to the Fidelity survey. Interest rates fell to ninth place among advisor concerns from third place in the first quarter, and inflation was at the very bottom of the list, at No. 14, receiving no votes from advisors.
“We’ve been conditioned for that to be a dominant concern,” says Litle, but those concerns have diminished because the pace of rate increases has been slow. In the past advisors were especially concerned about spikes in rates, which would hurt bond prices as well as utility stocks, considered bond proxies, says Litle.