The Pulse

RIAs Are Most Focused on Volatility and Interest Rate Risk

E*TRADE Advisor Services Study Reveals advisors also note recession fears have increased among the client population

Advisors also note recession fears have increased among the client population

August 09, 2019 08:05 AM EDT — NEW YORK–(BUSINESS WIRE)–E*TRADE Advisor Services, a provider of integrated technology, custody, and practice management support for registered investment advisors (RIAs), today announced results from the most recent wave of its Independent Advisor Sentiment survey:

Recession fears take the lead.
The number one concern among clients, according to RIAs, is a recession (33%), up seven percentage points from last quarter and replacing volatility for the top spot.

Emotions loom large
Advisors said the biggest mistake clients make is trying to time the market (43%), consistent with last quarter’s findings.

While clients appear less concerned about volatility, advisors remain focused
Volatility is the number one risk that RIAs are actively managing in client portfolios, followed by interest rates (56%), and a flattening/inverted yield curve (43%).

Advisors are eyeing IT above all other sectors
Advisors noted that sectors with the most opportunity for their clients in the next few months are information technology (53%), health care (43%), and financials (34%), consistent with last quarter.

Focused On Fundamentals

“Advisors are focusing on the fundamentals of our economy, which are on relatively solid footing despite how late we are in the bull market run,” said Matt Wilson, head of E*TRADE Advisor Services. “Amid the recent market volatility, advisors can really demonstrate their value to clients—shoring up defenses in client portfolios, helping them understand the bigger picture, and encouraging them to stay focused on their long-term goals. Advisors play a critical role in helping clients navigate not only the immediate challenges the market can present but also what the market could bring in the months to come.”

When it comes to the market, what are your clients contacting you most about?

Q3 2019

Q2 2019

Fears of a recession

33%

26%

Market volatility

24%

47%

China and US trade tensions

22%

11%

Gridlock in Washington

7%

5%

Economic weakness abroad

3%

0%

Federal reserve monetary policy

2%

1%

Flattening/inverted yield curve

2%

1%

Other

3%

4%

None of these

4%

5%

 

What is the biggest mistake you see your clients making?

Q3 2019

Q2 2019

Trying to time the market

43%

43%

Not saving enough for retirement

22%

27%

Prioritizing their dependent’s financial needs over their own

14%

11%

Acting on stock tips that don’t align with long-term goals

10%

8%

Asking for early withdraws from retirement accounts

7%

5%

Other

3%

4%

None

1%

2%

 

What risks are you actively managing right now when it comes to client portfolios? Select all that apply.

Q3 2019

Q2 2019

Market volatility

68%

75%

Interest rates

56%

53%

Flattening/inverted yield curve

43%

39%

Recession

40%

41%

Political instability

34%

33%

Inflation

22%

30%

Armed conflict, war, or terrorism

5%

7%

None of these

4%

5%

Other

2%

2%

 

What industries do you think offer the most potential for your clients this quarter? (Please choose your top three)

Q3 2019

Q2 2019

Information technology

53%

51%

Health care

43%

34%

Financials

34%

34%

Consumer discretionary

26%

11%

Consumer staples

22%

23%

Energy

21%

26%

Communication services

12%

8%

Utilities

10%

8%

Industrials

9%

12%

Materials

6%

5%

 

 

 

About the Survey
This survey was conducted in-house from July 16 to July 29, 2019, among a convenience sample of 305 independent RIAs.
About E*TRADE Financial and Important Notices
E*TRADE Financial and its subsidiaries provide financial services including brokerage and banking products and services to retail customers. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Commodity futures and options on futures products and services are offered by E*TRADE Futures LLC (Member NFA). Managed Account Solutions are offered through E*TRADE Capital Management, LLC, a Registered Investment Adviser. Bank products and services are offered by E*TRADE Bank, and RIA custody solutions are offered by E*TRADE Savings Bank doing business as “E*TRADE Advisor Services,” both of which are national federal savings banks (Members FDIC). More information is available at www.etrade.com.
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