Financial advisors continue to view market volatility as their top concern, but many have also learned to deal with it even as their clients increasingly panic, according to a survey by Eaton Vance.
Findings from the ninth Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey revealed that 55% of advisors reported their concerns about volatility have grown in the last 12 months, with 53% of advisors saying they believe market volatility is the "new normal."
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Out of 1,000 US financial advisors who participated in survey, 81% said that their clients are motivated by fear, while 53% of advisors said that clients are concerned about losing money on account of market swings.
About 62% of the advisors said clients view market swings as a risk, not an opportunity, up from 56% in the third quarter of 2015.
Eaton Vance managing director of retail sales John Moninger said: "Most advisors have learned how to cope with volatility, but their clients have not. The growing disparity between advisor and client perspectives highlights the importance of open, frequent communication and establishing and following a carefully constructed investment plan."
Furthermore, 28% of advisors said that volatility has improved their relationship with clients, while 20% said volatile market conditions has fetched them new clients.
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By GlobalDataHowever, advisors now have a more optimistic view of financial markets and the US economy, with 60% of them holding the view that the likelihood of a recession by year-end is low, up from 53% in the previous quarter.
About half of advisors (45%) now believe that equity markets will be bullish over the next quarter, and 14% expect bearish markets.
Over half of advisors also opined that domestic issues such as Federal Reserve policy and stalled US economic growth will be the main volatility drivers for the rest of this year.
