Advisor and investor confidence has dropped off in the last year as uncertainty continues in the face of bearish markets and prolonged volatility. The recent annual Advisor Authority survey conducted by Nationwide recorded a 15% drop in advisor optimism about markets and a 10% drop in investor optimism between this year and 2021.
Just 48% of advisors reported feeling optimistic about their 12-month financial outlook, down from 63% last year, while 39% of investors expressed optimism about their financial planning compared to 49% last year. This is the eighth year for the survey, which was conducted online between July and August and polled 506 financial advisors and 521 investors over the age of 18.
Recession concerns ranked highest for both advisors and investors: 82% of advisors ranked recession fear as their top financial concern, similar to the 77% of advisors reporting recession concerns in 2020 at the height of the pandemic. Investors were similar at 74%, listing recession fears as top of mind compared to 75% in 2020.
Volatility was the next closest for investors at 54%, expecting an increase in volatility over the next 12 months, but that number is the lowest it has been in the last four years (61% in 2021, 61% in 2020, and 66% in 2019).
“While it’s surprising that expectations about volatility have dropped among investors, it may indicate that they are coming to grips with the possibility that volatility is the new normal,” said Mark Hackett, chief of investment research at Nationwide, in the press release. “While investor concerns have lessened, volatility and inflation are likely to persist in the year ahead. Financial professionals should be talking to clients about implications for their portfolio.”
Worries about inflation in the next 12 months have jumped substantially since last year’s survey: 46% of investors reported concern compared to 29% in 2021. What’s more, 40% of investors attribute volatility over the upcoming 12 months to inflation.
Advisors Make a Difference in Retirement Planning
Over half of investors reported that their planned retirement date has changed (53%), with a full 20% pushing back their retirement date.
Almost all investors (86%) reported that having an investment plan makes them feel in control — even if it doesn’t plan for everything, but that number has declined since 2020, when 93% reported feeling in control. Similarly, 87% of investors with a plan in place feel confident about their investments, including during a financial crisis, but that number has declined from 90% in 2021.
Financial advisors make an outsized difference in retirement planning. Only 59% of investors without an advisor had plans for guaranteed retirement income compared to 85% of investors that do work with an advisor. The numbers are similar for those who make plans to prevent from outliving their retirement savings: 52% of investors without an advisor do this compared to 85% of investors that work with an advisor.
Of the investors surveyed, only 55% reported that they work with a financial advisor.
“Investors today want to feel confident in their ability to retire, no matter what is happening in the world,” said Eric Henderson, President of Nationwide Annuity, in the press release. “This is where advisors and financial professionals can step in to create a sense of security and confidence in their clients’ long-term plans.”
Nationwide offers a suite of ETFs that are risk-managed funds within the major equity indexes for advisors. The funds are actively managed and seek high monthly income and include the Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI), the Nationwide S&P 500 Risk-Managed Income ETF (NSPI), the Nationwide Dow Jones Risk-Managed Income ETF (NDJI), and the Nationwide Russell 2000 Risk-Managed Income ETF (NTKI).
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