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Alternatives and tactical management are top volatility solutions, says RIAs and fee-based advisors


In a special report that takes a 360-degree view on volatility – its causes and the solutions successful advisors are using to protect against it – Registered Investment Advisors (RIAs), fee-based advisors and individual investors say that ongoing volatility is among the top three macro issues that will most adversely impact portfolios over the next 12 months, while alternatives and tactical management are among the leading solutions and strategies used by advisors. 

These are among the findings from Jefferson National’s second annual Advisor Authority study conducted by Harris Poll, based on a comprehensive survey of 1,400 RIAs, fee-based advisors, and individual investors.

“As volatility rises, so does the need for holistic, guided advice of unbiased advisors who put clients’ best interests first,” says Mitchell Caplan, CEO of Jefferson National. “As our second annual Advisor Authority reveals, RIAs and fee-based advisors are taking action against the corrosive impact of volatility, using tactical management and alternative strategies to protect clients’ portfolios now and preserve their assets for the future.”

RIAs, fee-based advisors and investors agree that volatility is likely to rise—aggravated by politics in the US as well as economics both at home and abroad. More than three-fourths (76 per cent) of all advisors anticipate that volatility will increase in the coming year. Nearly two-thirds (63 per cent) of all investors anticipate that volatility will increase. 

Nearly two-thirds (62 per cent) of all RIAs and fee-based advisors feel pressure to revise their investing strategy in the current volatile market – and the most successful advisors feel it more. Investors are less pressured to change their investing strategy – 41 per cent feel pressure, while 44 per cent do not, and 15 per cent don’t know or are not sure. Of those who felt pressure to revise their strategy, 75 per cent of advisors and 72 per cent of investors plan to invest more tactically, while 69 per cent of both advisors and investors plan to invest more conservatively.

Alternatives are identified as an important solution in today’s volatile market, and the most successful advisors are more likely to use them. Nearly half (48 per cent) of RIAs and fee-based advisors rate Alternative Mutual Funds and ETFs – such as those using a long-short equity, managed futures and multi-strategy approach – as their number one solution. More than half (53 per cent) of High AUM Advisors and the majority (60 per cent) of High Earning Advisors rate alternatives Mutual Funds ETFs their number-one solution.

“When it comes to investing, protecting clients’ portfolios and protecting their own practice, ongoing volatility remains the number one concern of RIAs and fee-based advisors year over year – while investors are aware of volatility’s impact, they say that protecting assets is their number-one concern,” said Laurence Greenberg, President of Jefferson National. “This year’s Advisor Authority highlights these distinctions to provide actionable insights for all advisors at every level to build a more effective practice and to create greater value for their clients.”

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