Even before a late summer market dip ramped up volatility, most investors sought financial advice with a distinctly human touch to soothe their nerves.
According to the Investment Management Consultants Association’s (IMCA) 2015 Investor Sentiment Survey, 83 percent of investors want their advisors to provide a calming influence, and 92 percent say financial planners should help them maintain a long-term perspective on their investments.
“To most investors, cutting-edge strategies don’t have to do with aligning the best funds or timing the market,” says Sean Walters, IMCA CEO. “It has to do with helping clients align their objectives, finding the right allocations and buckets for their planning. Clients want to feel confident that the processes their advisors use have a long-term outlook.”
On Aug. 24, the Dow plunged by more than 1000 points in the morning and ended the day down 588 points, the worst single-day loss since 2011. IMCA’s report, released days afterward, indicated that investors were more concerned over a market correction (60 percent) than they were low yields (37 percent) or inflationary risk (29 percent).
“When someone is hurting, they go see a doctor,” Walters says. “When there’s a downturn or correction, that’s when there’s an opportunity for the profession to kick in and support clients in bigger, more meaningful ways.”
As a profession, financial advising is adjusting to evolving technology, shifting regulations and the perplexing millennial generation — but investor demand may have more influence on the way they do business.
“The things that investors want are things that aren’t typically delivered well by robo-advisors,” Walters says. “Though the long-term focus is there, robo-advisors can’t provide the same reassurance as a human advisor.”