Advisors in the first quarter of the year have been focused on regulatory changes and market volatility—but both can present opportunities for their businesses.
That's according to the most recent Fidelity Advisor Investment Pulse study from Fidelity Institutional Asset Management, which found that market volatility was a major concern for more advisors in the first quarter of the year than in the previous quarter. Almost 30 percent of respondents said it was an area of focus, compared with less than 20 percent in Q4 of 2015.
But the Department of Labor's fiduciary rule has also been on their minds, as political and regulatory changes occupied the No. 3 spot among their concerns. In fact, 16 percent of advisors put it among their top concerns, compared with 12 percent in Q4 2015.
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However, both concerns can be turned to advisors' advantage, since both provide the opportunity to reassure clients. Advisors can provide clients with the encouragement to regard volatility through a longer-term lens, thus preventing them from selling during a downturn and locking in losses.
In addition, preparing a response to the DOL's fiduciary rule that provides not just reassurance but a competitive advantage is something advisors should be considering. Developing an effective plan that allows advisors to discuss the impact of the rule with clients, as well as taking other actions to transition accounts or consolidate assets, can help advisors to reaffirm their value to their clients.
Participants in the Fidelity study are not alone in their concerns over both volatility and the DOL fiduciary rule. A Jefferson National poll revealed that volatility is the top trend advisors, RIAs and individual investors expect to impact their approach to investing, while a Pioneer Investments survey found that about half of retirement advisors expect the DOL's rule to help their businesses—though they're not quite so sanguine about the rule's effect on small- and middle-income investors. The impact on other advisors could, of course, be quite different.
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