Janus Henderson’s proprietary study of more than 1,000 respondents reveals investors are remaining calm, even optimistic– Nearly All Survey Respondents are Concerned with COVID-19, but Health Concerns Overshadow Financial Considerations
– Market Sell-Off Does Not Appear to be Driven by Mom and Pop Investors –
April 03, 2020 — DENVER–(BUSINESS WIRE)–Janus Henderson (NYSE/ASX: JHG) today announced the results of a proprietary survey, which was completed by 1,004 U.S. adults on March 16-17, 2020, to gauge general reaction to the coronavirus and specific behaviors regarding their investments. The survey was designed to be a nationally representative cross-section of U.S. households weighted as per the U.S. Census.
According to Matt Sommer, CFA, CFP®, CPWA®, Senior Managing Director and Head of Retirement and Wealth Advisor Services for Janus Henderson, “We regularly conduct surveys to provide the advisor community with timely insights and ideas to assist them in servicing their clients.”
The primary concern among all survey respondents was the potential for themselves or a loved one to contract the virus (42%). General unease regarding the economy and jobs (23%) and the day-to-day disruption of life (17%) were the next two top reasons for concern. Only 8% of respondents cited the financial markets and experiencing investment losses as their primary worry.
Investors Remaining Calm and Even Optimistic
Among the 589 respondents who invest in the financial markets, it appears the majority are staying the course, at least for now. Specific findings were:
- Approximately 72% of stock market investors have taken no action since the beginning of the market correction. In fact, 17% bought more stock than they sold and only 11% sold more stock than they bought.
- The vast majority of the full sample was optimistic about where the stock market will be 12 months from now.
- Approximately 66% believe the market will be higher, while 15% believe it will be the same and 19% believe it will be lower.
- While 46% of stock market investors are watching the financial markets more closely than usual, 40% are keeping tabs on the markets as they normally would, and 14% are checking even less periodically.
The most popular place to go for information regarding the financial markets is the media (45%), followed by family (18%), and financial advisor/financial planner (14%).
“With the stock market recent volatility, we wanted to better understand what was driving investor panic. It would appear from the data, that the sell-off has not been driven by main street investors, as the majority (72%) have not taken any action – buying or selling since the market decline began,” said Sommer.
“The key takeaway for advisors is not to assume all clients are panicked or unnerved by the market decline. Many savvy investors have experienced market downturns in the past and know from experience the importance of maintaining a long-term perspective. It is important for advisors to maintain a calm, at-ease demeanor when communicating with clients,” continued Sommer.
Financial Advisors Taking the Opportunity to be Proactive with Clients
Among the sample, 251 respondents work with a financial advisor or financial planner. These service providers were described in the survey as professionals who provide ongoing advice and not a single transaction. Specific findings were:
- The majority of respondents (58%) claim that their advisor or planner has proactively contacted them to discuss the recent events in the market.
- Among the 201 respondents who have received a recommendation from their financial professional, the most common advice was to “stay the course” (50%), review financial plan (27%), use the drop to buy more stock (25%), tax planning strategies such as tax loss harvesting and Roth conversions (17%), and refinance their mortgage (13%).
- Generally, respondents are satisfied with the performance of their advisor or planner over the last month with 55% extremely or somewhat satisfied. Approximately 24% feel neutral about their advisor’s or planner’s performance, while 21% are somewhat or extremely dissatisfied.
- Among those who do not use a financial advisor or financial planner, the recent market correction has prompted 20% to reconsider their decision.
“Times of volatility create a unique opportunity for advisors to make a meaningful difference in how clients are feeling about their financial future,” said Sommer.
There are three recommendations for advisors to use with clients who are feeling unnerved about the markets:
- It is critically important to empathize with your clients’ concerns. Sometimes advisors immediately try to educate clients to ease their worries. The first step is to validate how clients feel and explain being nervous is perfectly reasonable. Without this step, people’s feelings can be perceived as being summarily dismissed.
- Rather than providing nervous clients with a 100-year history of the capital markets, a more relevant approach might be to explain that since World War II, there have been 12 drops of more than 20%. The average recovery time was approximately 24 months. While no one can predict when the markets will turn around, this historical data point will manage expectations of a quick recovery, while offering a light at the end of the tunnel.
- If a client seems inclined to sell their stocks, ask them to imagine their future self a few years from now. Then ask the client to think about the level of regret their future self may feel if they sell today and the markets eventually recover. The potential for feeling regret is an important component to the decision-making process.
Past performance is no guarantee of future results. International investing involves certain risks and increased volatility not associated with investing solely in the UK. These risks included currency fluctuations, economic or financial instability, lack of timely or reliable financial information or unfavourable political or legal developments.
The survey was designed to be a nationally representative cross-section of U.S. households of 1000 adults 18+ and is weighted as per the U.S. Census.
Janus Henderson Group (JHG) is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, fixed income, quantitative equities, multi-asset and alternative asset class strategies.
Janus Henderson has approximately US$374.8bn in assets under management (as of December 31, 2020), more than 2,000 employees, and offices in 28 cities worldwide. Headquartered in London, the company is listed on the New York Stock Exchange (NYSE) and the Australian Securities Exchange (ASX).