The latest Eaton Vance Advisor Top-of-Mind Index (ATOMIX) Survey results are “more uncertain than we’ve seen” in past results, according to John Moninger, managing director of retail sales at Eaton Vance Distributors.

Moninger stopped by ThinkAdvisor’s New York office to discuss the quarterly survey of more than 1,000 financial advisors that was released Wednesday.

The survey finds that advisor and client concerns dropped this quarter as markets rallied and volatility subsided. However, as Moninger points out, the survey also finds that there is an underlying feeling of wariness heading into September.

Fifty-three percent of advisors said their clients were still motivated by fear more than greed, but that’s a stark contrast to Q3 2016, when 82% said fear was their clients’ top motivator.

While investors’ fear is subsiding, advisors are describing their clients as anxious and wary. For the first time on the survey, advisors were asked, “how do you define advisor sentiment?” and 46% of advisors described investor sentiment as anxious. Second on the list was “wary.”

“They’re operating from a place of less fear … yet, they’re anxious and wary about the future of the markets. That’s interesting,” Moninger told ThinkAdvisor. “To me, you’re in a place where there’s a lot of unknowns going on. Which I think is what you’re feeling in the markets and certainly what you’re feeling with investors.”

Managing market volatility regained its position as the top focus for advisors despite falling to 110.5 on the index, well below its peak of 129.7 in Q3 2016.

The survey found that 72% of the advisors surveyed believe the U.S. political environment will be the biggest source of market volatility for the remainder of the year, which Moninger said is “no surprise.”

In addition, 64% of the advisors surveyed expect U.S. market volatility to increase over the next six months. According to Moninger this is likely because volatility has remained relatively low.

“There hasn’t really been a lot of volatility. The markets, measured by the VIX or whatever measure you want to use, has been somewhat anemic,” he said.

The CBOE’s Volatility Index (VIX) was hovering between 11 and 12 on Wednesday afternoon.

Moninger thinks the volatility that advisors are anticipating will more likely be caused by “shock value” rather than “a natural increase in volatility.

“I don’t think people think [the VIX is] just gradually going to go up to 20 just because,” he said. “I think they’re waiting for something to happen.”

To Moninger, the survey is screaming at him, “Wary and anxious!”

“I feel like people are more confused now than ever,” he told ThinkAdvisor. “You’ve got regulatory confusion. You’ve got market confusion. Valuations are leading people to make one set of decisions, which is ‘it feels overvalued yet I don’t want to miss out on the market because the market keeps going.’”

 

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