Ninety-three percent of financial advisors say rising interest rates will be a critical topic of conversation with clients in 2014, according to a new Janus survey.
The online survey of 302 advisors also found that 84 percent will have conversations about equity market highs and the same percentage will discuss income generation.
Nearly twice as many advisors feel they are more concerned than their clients about rising interest rates than advisors who don't feel that way, according to the survey. Only seven percent of advisors said clients are actively seeking advice on the topic.
"While we believe opportunities exist for risk-adjusted, fixed-income returns, advisors need to initiate conversations about the potential impact of rising interest rates as many of their clients have never seen a significantly down or flat bond market," said Colleen Denzler, senior vice president and global head of fixed-income strategy with Janus.
Advisors do not believe their clients are connecting the broader economic issues to their personal portfolios. Only eight percent of advisors believe clients understand how income is generated in their portfolios, according to the survey.
Looking forward to 2014, advisors feel clients will be most receptive to two iincome-generating investments: dividend-paying stocks (86 percent) and high-yield corporate bonds (53 percent of advisors).
"Conversations about high-yield strategies are really about exercising proper risk management and making sure the client truly understands an investment the advisor is recommending," Denzler said.
Cogent Research conducted the survey from December 12 through January 8.