Investors who work with a financial advisor are much likelier to have a sophisticated understanding of fixed income investing than those who do not enlist professional guidance, BNY Mellon Investment Management reported Monday.
A survey of American investors’ knowledge, attitudes and behaviors about fixed income assets revealed, however, that misconceptions exist around fixed income investing, regardless of whether participants benefited from financial advice.
Sixty-four percent of respondents who said they worked with an advisor reported that they had a lot or at least some understanding of fixed income securities, compared with 35% of those who did not have an advisor.
Greater knowledge about fixed income asset classes appeared to correlate with increased portfolio allocation, according to the survey results.
Nearly two-thirds of investors who received financial advice said they had some allocation toward fixed income products, compared with just a quarter of those who said they had no experience working with an advisor.
Not only that, 42% of those who had received advice expressing some or strong appetite for risk, versus 27% who had not.
“The study suggests a real benefit to working with financial advisors when it comes to having a deeper appreciation of the range and variety of available fixed income asset classes and the role they play in designing one’s investment portfolio,” Liz Young, director of market strategy at BNY Mellon Investment Management, said in a statement.
“FAs can provide real value and understanding in determining the best ways to incorporate a fixed income allocation into one’s investment portfolio based on an individual’s goals and personal set of circumstances.”
Engine Caravan Surveys fielded a national online survey in July among a sample of 1,003 men and 1,004 women.
BNY Mellon noted that working with an advisor appeared to help investors understand the important role of fixed income investing in retirement planning.