Many financial advisors are taking proactive steps to deal with slimmer margins and increasingly risk-averse clients, according to a recent survey by Russell Investments.

The survey of 348 advisors found that many of them are making short-term changes to meet client demands for guaranteed income products and for implementing tactical market calls in response to growing market volatility.

Among the findings in Russell's quarterly Financial Professional Outlook survey, 45% of advisors said they are shifting transactional clients to fee-based accounts, 39% said they are selling more annuities, and 26% said they are using new prospecting methods.  

Regarding the markets, 90% of respondents said they are employing strategic asset allocation to some extent and 35% are doing so extensively. In addition, 85% said they are using tactical asset allocation to some extent and 27% are doing so extensively.

"The global financial crisis shook many investors' faith in the value of diversification. I am glad to see that advisors still recognize diversification as a core element of successful investment management," said Phill Rogerson, managing director of consulting services for Russell's Private Client Services business. "That said, the increasing popularity of tactical asset allocation is undeniable, and advisors must be careful of the substantial risk that can be introduced with tactical shifts."

According to Russell, 59% of respondents expect to boost their allocation in emerging market equities, up 11 percentage points from the prior survey.

All told, the survey found just 9% of advisors are "not doing anything differently" in terms of practice management.