Natixis Global Asset Management has asked 150 financial advisors about both the biggest mistakes investors make, and about the biggest challenges they face.
The survey found that most advisors believe investors make poor decisions when they focus on day-to-day fluctuations in the price of oil, interest rates, or financial markets; 73% of those surveyed said the biggest mistake investors make is to react emotionally to these types of events.
Asked about the major economic trends which could limit their ability to expand their businesses, 64% of advisors said that market performance and volatility were the biggest challenges, followed by 33% who expressed concerns about interest rates. Advisors are not, however, terribly concerned by robo-advisors and the appeal they may have for the younger generation.
While 76% of financial advisors agree that firms with younger clients will grow more quickly than those with older ones, only 47% of those surveyed perceive automated advice as a threat to their business model. Although 76% do think that robo advice will force traditional advisors to improve their services to stay competitive, 78% also believe that many investors will abandon robo advice in volatile markets because they won’t receive individualized service.
“Advisors recognize the disruptive potential of automated advice,” comments Ed Farrington, executive vice president, business development and retirement, Natixis Global Asset Management. “They have their own competitive advantages, too, especially their ability to offer one-on-one attention and advice. They are more than prepared for the challenge.”