Nearly 80 percent of financial advisors are optimistic about the capital markets over the next three years and more than one-third of their clients share their optimism, according to Russell Investments’ Q4 Financial Professional Outlook survey.
The difference in optimism levels between advisor and client may seem great to some but the survey found, the ‘optimism gap,’ or the difference between advisor and investor optimism, had actually narrowed to a record low of 43 percent.”
The quarterly survey of U.S. financial advisors found that 70 percent of respondents plan to grow their business through client acquisition in 2014, up from 58 percent of advisors in 2012. An additional 57 percent of advisors said they plan to improve their client relationships this year as well, compared to 62 percent in December 2012.
Nearly half of respondents said they are focused on managing their business and activities more efficiently, growing their books of business with new assets from existing clients, 42 percent, and improving client communications or meetings, 30 percent.
Advisor optimism, while still high at 79 percent was still lower than the 83 percent recorded in the third quarter, Russell Investments found.
“While these may not seem like significant moves at first blush, investor optimism as reported by advisors actually matched its previous high point reached in February 2011. The main topics of conversations between advisors and their clients revolve around portfolio rebalancing/shifting asset allocations, but concerns about government policy came a close second, followed by the more predictable portfolio performance conversations.
Fifty-six percent of advisors said their clients want to discuss government policy first, then market volatility, 42 percent, and portfolio performance, 28 percent.
Russell Investments said that since 2010 when it began conducting these surveys, it has never seen the topics that advisors and clients want to discuss overlap so much. The government policy discussions focused on the rollout of the government’s new healthcare website, questions about stimulus tapering and uncertainty about when the Federal Reserve might begin to raise interest rates.
Russell Investments conducted its survey between Nov. 5 and Nov. 24, 2013. It had 257 survey responses.
Russell Investments provides asset management and investment services to institutional and individual investors.