Unfortunately, financial crises have become a fact of life. In the 20th century, we lived through the Crash of 1929, the Bear Market of 1968, the 1973 OPEC embargo, a recession in 1981, Black Monday in 1987 and a recession in 1990. When we reached the 21st century, the 2001 Dot-Com Crash, 2008 Global Financial Crisis and 2020 Covid-19 pandemic’s economic recession occurred at an even more rapid clip.

As these traumatic financial events, which many used to consider once-in-a-lifetime experiences become more commonplace, it comes as no surprise that 86% of advisors and financial professionals expect to live through more financial crises in their lifetime, according to Nationwide’s seventh annual Advisor Authority study. One in four (26%) advisors expect to live through three or more crises.

Even with an expectation for more crises in their future, advisors are confident they can weather the storm. Because of their experience living through previous crises, 70% of financial professionals feel more confident about their ability to help protect their clients' finances and investments should another crisis arise. This is in sharp contrast to only 44% of investors who feel confident they can protect their own finances and investments during future crises.

Despite such a large confidence gap, the good news is many investors already recognize the importance of working with an advisor. Nine in 10 (91%) investors who have an advisor say that working with them helps them feel more confident—even during an extreme financial crisis.

Today, there is a huge opportunity for advisors to build relationships with the nearly four in 10 investors who don’t work with an advisor. Advisors remain more optimistic about the market than investors (63% vs. 49%) who are more likely to worry about the next time disaster will strike and are less optimistic about their preparation for such an event. Your experience helping clients through panicked moments can not only break the ice on new relationships, but also strengthen existing ones.

Helping Clients Prepare For The Next Crisis
Many investors adjusted their financial habits in response to previous crises—some for better, some for worse. Some of the more ill-advised decisions investors shared in our survey include liquidating assets from qualified retirement savings plans (12%) or non-qualified investment accounts (12%) to cover financial obligations and moving the majority of their investments from stocks to cash (9%). Share these cautionary tales with clients to help them understand the opportunity to avoid short-sighted decisions with long-term consequences that can occur in the absence of good financial advice in critical moments.

Another topic you can focus on with clients is market risk. Ninety-three percent of financial professionals have a strategy in place to protect their clients’ assets against market risk. However, only 66% of investors have a strategy in place to protect against market risk, an almost 30-point gap. If you are working with a client who felt anxiety when markets crashed in 2020, help them build a strategy that will allow them to rest easier the next time around.

To manage market risk, both advisors (55%) and investors (49%) say they are likely to rely on diversification. However, advisors were more likely than investors to deploy a broad range of solutions to manage market risk, including hedging strategies (39% vs. 20%), liquid alternatives (38% vs. 23%), smart beta ETFs (31% vs. 11%) and non-correlated assets (31% vs. 10%). Similarly, advisors were more likely to rely on a range of annuities, including fixed annuities (48% vs. 29%), fixed indexed annuities (46% vs. 23%), in-plan principal protection guarantees (38% vs. 22%) and registered index linked annuities (35% vs. 11%).

First « 1 2 » Next