Surveys

Study Reveals Huge Disconnect Between Financial Advisors And Investors

Vanessa Doctor 22 March 2011

Study Reveals Huge Disconnect Between Financial Advisors And Investors

It appears that there is a huge gap between what financial advisors think and what investors feel they need, as shown in a recent study by MFS Investment Management.

Among the findings were that 20 per cent of advisors believe investors are most worried about a major decline in the stock market, but only 5 per cent of investors say they are. Meanwhile, 72 per cent of advisors think US equities are an “excellent or very good place” to invest, while only 35 per cent of investors agree.

Furthermore, 75 per cent of advisors think that clients have become more tolerant of risk over the past year, against only 15 per cent of investors who say they have.

This is just a few of a number of so-called "disconnects" between advisors and investors, as revealed by MFS.

"[These] show a need for advisors to reconsider how they view their clients," said William Finnegan, senior managing director of retail marketing for MFS.

Between the advisors and gen X/Y investors, or those under 46 years old, 84 per cent of advisors believe that gen X/Y's main investing goal is growing assets. However, only 38 per cent of this demographic report this as a primary goal.

"We believe advisors should reassess how they communicate with clients, and what the lasting impact of 2008's financial crisis has had on investors' risk tolerance," Finnegan added.

The study was undertaken through the firm Research Collaborative and was conducted online from 7 to 15 February 2011. A total of 596 individual investors with at least $100,000 in investable assets and 612 licensed financial advisors with at least $500,000 in annual mutual fund sales participated in the survey.

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