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Most financial advisers optimistic about capital markets


Financial advisers appear to be significantly more optimistic about the capital markets than their clients, according to the latest Financial Professional Outlook, a quarterly survey of US financial advisers by Russell Investments.

Only seven per cent of advisers believe their clients are optimistic about the capital markets over the next three years.

This assessment is in stark contrast with the advisers’ own outlook – 59 per cent of advisers are optimistic over that same period of time.

Phill Rogerson, managing director, consulting services for Russell’s private client services business, says: “Advisers know that the global financial crisis has left many of their clients fatigued, jaded and distrustful. That scepticism means advisers must now work harder to rebuild their clients’ trust in the capital markets. That trust is of paramount importance because most individual investors will almost certainly fail to achieve financial security in retirement unless they choose to engage in a sensible savings and investment plan.”

Advisers believe that their clients’ lack of confidence in the markets has also become a major concern as their clients consider whether they will be able to achieve their financial goals. Seventy eight per cent of financial advisers say that clients see economic uncertainty (slow economic growth) as an impediment to reaching their financial goals. Sixty one per cent think that market volatility concerns their clients.

Advisers have a different perspective on where the obstacles lie for their clients. Sixty per cent say that what concerns them the most is clients under-funding their retirement accounts. Fifty four per cent of advisers also pointed to the federal budget deficit as a prominent concern.

“Advisers see challenges both in how their clients approach financial planning and in the larger economic environment. Our recommendation is for advisers to encourage their clients to focus on what is within their control and view the present situation in a broader time horizon,” says Rogerson. “Advisers can take action to rebuild client confidence in the markets by having the right conversations to address fears and focus on the levers you can control – spending, income and investment.”

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