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Advisors Get an ‘A’ From Investors on Pandemic Response: Survey

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In August, Dalbar, an investment research firm, surveyed 995 investors in North America who had a relationship with a financial advisor, presenting them with questions about their experiences with investing, the markets and their advisor during the coronavirus market crisis and months that followed.

Related: Americans Believe Pandemic Economy Is Worse than 2008 Recession

“In 830 of those cases, the investor agreed that their account balance is higher today because of the help of their advisor during the crisis,” Dalbar’s chief marketing officer Cory Clark said in a statement. “That says something quite remarkable about the value of professional advice.”

The survey found that some nine in 10 investors reported a significant or slight increase of both confidence and trust in their advisor as a result of the pandemic, and were more likely to retain their advisor.

Eighty-three percent reported that their account balance was higher today, thanks to their financial advisor’s help.

Investors who said they had followed their advisor’s recommendation to increase investment reported the highest satisfaction in their advisor, while those who followed advice to do nothing reported the lowest satisfaction.

Advisor Communications

Most investors in the survey said they had received proactive communication from their advisor during the market crisis.

Before the onset of the crisis, two in five investors said they received monthly communication from their advisor, a quarter reported quarterly and a fifth annual communication. Thirteen percent said they heard from their advisor less than once a year.

Fifty-three percent of respondents reported that their advisor had contacted them during the worst of the crisis at the time they needed it most, while 47% said their advisor had not communicated with them during the crisis when they needed it most — or failed to get in touch at all.

Related: Fidelity: People More Financially Stressed Than 6 Months Ago, Don’t Expect Relief Soon

According to the survey, four in five investors received email from their advisor, more than half got a phone call and one in three a text message.

Sixty-nine percent of investors offered two-way communication, and 52% of investors accepted it.

Dalbar noted that investors who received proactive communication from their advisors showed much higher satisfaction than those who did not, regardless of frequency or time.

However, timing of communication during a crisis is important, it said, noting that a single well-timed contact would result in the same investor satisfaction as frequent ones that were not as well timed.

Lessons From the Crisis

Many investors in the survey said they would like their advisor to handle the crisis differently. More than half wanted suggestions for better ways to protect their investments, and 30% recommendations for investments that were not subject to such losses.

Only 8% said they wanted their advisor to reach out to them more.

Most investors remained positive after the market crisis because they knew that markets would recover in the long run, according to the survey. Some reported being even more comfortable investing after seeing the markets rapidly recover in April.

Forty-three percent of investors said they were taking a long-term view and adhering to their investment strategy no matter what the rest of 2020 brings.

Related: More Investors Turn to Financial Advisors During Pandemic

Forty percent reported that they were prepared for the worst by being invested conservatively or in products that guarantee against loss.

How investors’ risk tolerance changed because of the crisis varied greatly, the survey found. Between 20% and 26% all reported either a significant decrease, a slight decrease, a slight increase or no change in risk tolerance.

Only 10% of investors reported a significant increase in risk tolerance following the market crisis.

Eighty-eight percent of respondents opined that another mass shutdown due to the coronavirus was likely or very likely. Likewise, 81% expected another market crash before year-end.

Half of investors said they were more willing to earn less on investments in order to guarantee against losses.

As to the Nov. 3 election, 40% of investors reported being fearful about investing if President Donald Trump is reelected, while 13% were hopeful if he is reelected and 14% were fearful if he loses the election.


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