Advisors and investors don't seem to be on the same page in terms of their financial concerns and perceptions of the market, according to a recent survey by MFS Investment Management.
According to the preliminary findings from the Boston-based company's Investing Sentiment Survey, 20% of advisors believe investors' top financial concern is a major drop in the stock market, while only 5% of investors say that's the case. Seventy-two percent of advisors are bullish toward U.S. equities and 60% feel the same about international stocks. Conversely, only 35% of investors are bullish toward U.S. equities and 22% feel that way about international stocks.
Advisor perception of investor risk tolerance was also overestimated, with 75% of advisors perceiving investors as more risk tolerant over the past 12 months versus 15% of investors who reported a willingness to take on more risk.
MFS also identified a large disconnect between advisors and investors from Generations X and Y. Specifically, 84% of advisors believe that growing assets is the primary investing goal of Gen X/Y investors, but only 39% of GenX/Y investors agreed. Advisors also believed that Gen X/Y investors have 50% of their investments in U.S. equities, and 9% in cash. However, Gen X/Y investors reported having significantly less equity exposure (34%) and a lot more cash (30%).
"With Gen X/Y maturing and Boomers approaching critical decision points for retirement, we believe advisors should reassess how they communicate with clients, and what the lasting impact of 2008's financial crisis has had on investors' risk tolerance," said William Finnegan, MFS' senior managing director of retail marketing.