While the Covid-19 pandemic did not result in a long-term economic downturn, it has changed investors’ attitude toward their finances — and financial advisors should be ready to address a high demand for control, according to a recent report.
In all, 34% of retail investors say they must exert more control over their own investments, Cerulli Associates says. That rises to 60% among investors age 30 and under, while falling to just 12% among respondents age 70 and older, according to the report.
Financial advisors may also be able to lure more clients. Cerulli says investors with automated online service providers, representing 57% of respondents, are the ones who want more control, while those with independent providers, making up 18% of respondents, are the most comfortable with the level of control they already have.
Cerulli also says that it expects the proportion of investors who identify as moderate to "evolve” after remaining at around two-thirds since 2014.
For financial services providers to stay relevant in this environment, they’ll need tools to assess clients’ capacity and appetite for portfolio risk, Scott Smith, director at Cerulli, says in a statement.
“Client-facing staff need to be prepared to help investors reach their goals and mitigate risk with portfolios that are optimally designed,” he says in the statement.
Providers should also look at how they can help clients consolidate their financial lives, offer easier access to their finances and provide personalized services such as budget planning through digital banking, risk tolerance-based investment options and goal-oriented planning based on clients’ investment needs, Cerulli says.
“Ultimately, when risk and reward is presented to clients in an intuitive way, and in a manner that allows them to see the strategies in relation to their financial goals, it becomes easier to make an educated investment decision while allowing for otherwise risk-averse clients to make the most out of rising markets — even in more unstable times,” Smith says in the statement.
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