The Advisory Career

Volatility and Investor Behavior

MDRT Study: Investors, clients look to their advisors in uncertain times

PARK RIDGE, Ill. (June 12, 2018) — A recent study conducted by the Million Dollar Round Table (MDRT) surveyed consumers during a week of market volatility to understand investment behaviors and the potential role of financial advisors. Results show that many respondents would make adjustments to their investment portfolios based on various indicators during a week of market volatility. In addition, 48 percent of consumers with financial advisors would consult their advisor before making portfolio adjustments to prepare for future volatility.

Seventy-four percent of consumers with advisors indicate their advisor shared best practices for responding to market volatility. As a result, more than half of respondents with financial advisors expressed the relationship increased their understanding of appropriate actions to take when the market is volatile. Additionally, consumers with advisors were more likely to follow news of volatility than those without; 51 percent versus 31 percent respectively indicated they very or somewhat closely followed the news.

Withstanding Volatility

“As many experts anticipate sustained periods of market volatility, it is important that advisors continue to educate clients to deter them from emotionally-based decisions regarding their portfolios,” said James D. Pittman, CLU, CFP, MDRT President. “Savvy advisors are providing clients with solutions that help their portfolios withstand market volatility while delivering peace of mind during turbulent market conditions.”

As many experts anticipate sustained periods of market volatility, it is important that advisors continue to educate clients to deter them from emotionally-based decisions regarding their portfolios

More than half of respondents, 60 percent, indicated they do not typically adjust their portfolios during periods of market volatility. However, when asked what would prompt potential portfolio adjustments during market volatility, survey respondents indicated decisions could be influenced by their portfolio’s near-term performance. Forty-six percent said they would make an adjustment if they thought the market was going to continue to drop, while 27 percent would take action if they lost a certain percentage of money.

Survey Methodology:
The survey was conducted by G&S Business Communications on behalf of MDRT. G&S conducted an online snap poll of 500 consumers in the United States ages 18+. The survey was conducted from June 1-2, 2018 following a period in which the Dow Jones Industrial Average fluctuated between losses ($391.64 and $251.94), and gains ($306.33 and $397.85).[i] The market was closed one day that week for Memorial Day.

 

 

About MDRT
Founded in 1927, Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals®, is a global, independent association of more than 62,000 of the world’s leading life insurance and financial services professionals from more than 500 companies in 69 nations and territories. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service. MDRT membership is recognized internationally as the standard of excellence in the life insurance and financial services business. For more information, please visit mdrt.org and follow them on Twitter @MDRtweet.