Market volatility is an increasing worry for financial advisors, according to the most recent Advisor Top-of-Mind Index survey conducted by Eaton Vance, which was released Thursday.
More than half (55 percent) of financial advisors say protecting client wealth from volatility increased in importance over the last 12 months.
“Volatility’s unpredictability has made investors uncomfortable in the current market environment and reduced confidence in their ability to reach their goals,” says John Moninger, managing director at Eaton Vance. “Despite their own rising concerns, we believe advisors are doing their best to help their clients navigate increasing volatility by staying calm, focused and opportunistic.”
Advisors are divided about what recent volatility means for markets going forward. Thirty-nine percent say it is “somewhat likely” to lead to an equity bear market, while 16 percent say it is “most likely” and 38 percent say a bear market is “not likely at all.”
Edward Perkin, chief equity investment officer at Eaton Vance, views the pickup in volatility as the market’s attempt to price uncertainty. “History has shown that the best opportunities tend to present themselves when uncertainty is running high,” he says.
Half of advisors say they stay the course when markets are volatile. Moninger agrees, but cautions advisors that doing nothing is not a strategy.
“Investors should resist the temptation to be motivated by fear. Adhering to long-term investment strategies in times of market volatility is prudent, but only if investors are prepared and have a strategy in place that factors in periods of increased market volatility,” he says.
Eaton Vance is an investment management firm. The Advisors Top-of-Mind Index is a survey of 1,001 financial advisors.