Advisors Serving Consumers

A recent study conducted by the Million Dollar Round Table (MDRT) surveyed consumers during a week of stock market volatility to understand investment behaviors and the potential role of financial advisors.

Results show that many respondents would make adjustments to their investment portfolios based on various indicators during a week of market volatility. In addition, 48 percent of consumers who use financial advisors would consult their advisors before making portfolio adjustments to prepare for future volatility.

Seventy-four percent of consumers with advisors indicated that their advisors shared best practices for responding to market volatility with them. As a result, more than half of respondents with financial advisors said that the relationship increased their understanding of appropriate actions to take when the market is volatile. Additionally, consumers who use advisors were more likely to follow news of volatility than those who do not. Fifty-one percent, compared to 31 percent, respectively, indicated they very or somewhat closely followed the news.

“As many experts anticipate sustained periods of market volatility, it is important that advisors continue to educate clients to deter them from emotionally-based decisions regarding their portfolios,” said James D. Pittman, CLU, CFP, MDRT President. “Savvy advisors are providing clients with solutions that help their portfolios withstand market volatility while delivering peace of mind during turbulent market conditions.”

Responding to volatility

More than half of respondents, 60 percent, indicated they do not typically adjust their portfolios during periods of market volatility. However, when asked what would prompt potential portfolio adjustments during market volatility, survey respondents indicated that their decisions could be influenced by their portfolio’s near-term performance.

Forty-six percent said they would make an adjustment if they thought the market was going to continue to drop, while 27 percent would take action if they lost a certain percentage of money.

The survey was conducted by G&S Business Communications on behalf of MDRT. G&S conducted an online snap poll of 500 consumers in the United States ages 18+. The survey was conducted from June 1-2, 2018 following a period in which the Dow Jones Industrial Average fluctuated between losses ($391.64 and $251.94), and gains ($306.33 and $397.85).[i] The market was closed one day that week for Memorial Day.

For more information, visit mdrt.org.