Who’s afraid of Janet Yellen?
Not advisors, according to a Fidelity survey that found that market instability trumps uncertainty over interest rates among advisors’ concerns.
Advisors were most concerned about portfolio management in the third quarter, driven in large part by market volatility. One-third of survey respondents cited it as an area of focus, according to Boston-based Fidelity Institutional Asset Management’s "Advisor Investment Pulse" survey of 250 advisors,
Client responses to volatility came in second, with 23 percent of the respondents saying they were most focused on managing emotions during the bumpy third quarter.
In the second-quarter Investment Pulse survey, portfolio management and volatility ranked second and third among advisor concerns, behind interest rates.
Advisors’ concerns about interest rates declined through the third quarter, perhaps because the Fed opted not to raise rates in September or October, said Scott E. Couto, head of distribution at Fidelity Institutional Asset Management.
“With no movement on interest rates in September, significantly fewer financial advisors are making Fed-watching their pastime,” said Couto. “With greater market volatility, advisors are focused on adding value by helping clients smooth out the ride, positioning portfolios not only for turbulent times but for the long term.”
Advisors were also focused on preserving their clients’ capital and finding ways to generate healthy returns amidst the volatility, according to Couto.
Couto recommended that advisors diversify across and within asset classes, practice sector and cyclical investing to reduce downside risk and leverage actively managed opportunities.