Worry about the decline in real estate values is plaguing the clients of a majority of financial advisors, according to a survey released Tuesday by Natixis Global Asset Management.
While outliving their assets continues to be the top concern of advisors' clients, 59% of advisors say the decline in real estate values that has hit the markets in the last few years has their clients worried.
"Americans are no longer in denial about real estate values, and they recognize how this impacts their financial well-being, particularly in retirement," says John T. Hailer, president and CEO of Natixis Global Asset Management. Natixis is an asset management firm based in Boston and Paris with $748 billion in assets under management. The survey included 163 financial advisors from 150 firms with $670 billion in AUM.
In addition to being concerned about real estate values, 81% of the advisors say their clients are worried about the long-term durability of their assets, including whether they will be able to meet their retirement income goals, and a like number of advisors say clients are worried about outliving their assets.
Four out of five advisors acknowledge it will be difficult to effectively manage volatility risk for their clients who are in retirement.
At the same time, advisors say they feel they have the tools to build portfolios that can weather market volatility, and nearly all (95%) are confident their investment strategies will help clients.
"The challenge lies in educating clients about the need to make smarter use of traditional asset classes and [to] embrace alternative investments, commodities, hedged equities and other investments that can reduce risk in a portfolio," says Hailer.
"The survey findings underscore the importance of advisors and other financial professionals providing their clients with the information and tools they need to make sound decisions about their personal savings objectives, risk tolerances and retirement goals," he adds.
On a policy issue, four out of five advisors say they oppose proposals to scale back retirement savings incentives. Congress is talking about capping the amount of tax deferred money a person can put in a retirement plan.
The American Society of Pension Professionals & Actuaries says the proposals are based on faulty financial figures. The budget projections assume the tax deferrals for retirement plan contributions are a loss to the government, when in fact the taxes will be paid when the money is withdrawn, the society says.