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Although the pandemic was cited as the No. 1 cause of volatility, investors and advisors agreed that the economy and the election are major contributors, according to Nationwide's sixth annual Advisor Authority survey. The survey found that 61% of investors and 68% of advisors expect market volatility to increase over the next 12 months. In spite of that, only 22% of investors and 31% of advisors say managing volatility is their No. 1 financial concern when it comes to protecting portfolios against loss.
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Furthermore, only 64% of investors have a strategy to protect their assets against market risk. Meanwhile, 91% of advisors say they have a strategy to protect their clients assets.
Nationwide surveyed over 2,500 advisors and investors between May 27 and June 25.
"2020 has been a year defined by the unprecedented and the unexpected — from the highly contested presidential election to the pandemic's outsize impact on our country's physical, mental and financial well-being — and the fallout is reflected by a less optimistic outlook," Craig Hawley, head of Nationwide's Annuity Distribution, said in a statement.
Investor optimism fell slightly in 2019, but took a tumble this year: falling 19 points to just 36% of respondents. Advisors' outlooks are only slightly rosier. Their optimism fell 12 points to 38%.
In fact, Nationwide found that 85% of investors say "they could do all the right things to manage their finances, and still be blindsided by outside events."
If there's good news in any of this, it's that investors are recognizing the value of having a financial advisor. Investors who say they have an advisor increased to 67% in 2020. Their top reason is the confidence they have in their financial future when working with a professional.
Here's how the top three macro factors are impacting investors and advisors:
Pandemic
- 63% of investors and almost 66% of advisors say the pandemic is the leading cause of volatility.
- 41% of investors and 43% of advisors say that the COVID-19 pandemic will have the biggest adverse impact on their portfolios.
- 32% of investors and 36% of advisors say COVID-related losses are their biggest financial concern.
Economy
- 42% of investors and 40% of advisors cited economic performance as the top volatility driver.
- 75% of investors believe the U.S. is facing a recession in the next 12 months, as do 77% of advisors.
- 65% of investors are concerned about a bear market in the next 12 months, a fear they share with 74% of advisors.
- 26% of investors think they should revise their investing strategy, compared to 50% of advisors.
Election
- 41% of investors and advisors agree the presidential election is driving volatility.
- 15% of investors and 10% of advisors say the election will have the biggest adverse impact on their portfolios.
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