Despite closing in on more record market highs, advisor and investor optimism are down for the second year in a row.
Nearly two-thirds of investors (61%) and more than two-thirds of advisors and financial professionals (68%) anticipate market volatility will increase over the next 12 months.
They also agree that the COVID-19 pandemic and presidential elections are among the top three factors driving volatility and negatively impacting portfolios.
As a result, investors, advisors and financial professionals are recalibrating their financial outlook, and their optimism continues to decline for the second year in a row, while their concerns are on the rise.
These are among the findings from Nationwide’s sixth annual Advisor Authority study from the Nationwide Retirement Institute.
“2020 has been a year defined by the unprecedented and the unexpected— from the highly contested presidential election to the pandemic’s outsize impact on our country’s physical, mental and financial well-being—and the fallout is reflected by a less optimistic outlook,” Craig Hawley, Head of Nationwide’s Annuity Distribution, said in a statement. “It’s important for investors, advisors and financial professionals to remember that there are solutions to protect their portfolios and help provide a more secure retirement—so they can feel more confident and stay focused on their long-term financial plans.”
Financial outlook/optimism decreases
Investor optimism about their financial outlook has fallen 19 percentage points this year, to just 36% in 2020 from 55% in 2019, after dropping 7 percentage points last year.
Likewise, advisor and financial professionals’ optimism has declined 12 percentage points this year, to just 38% in 2020 from 50% in 2019, after declining 14 percentage points last year.
Concerns are growing about the health of the economy. Three-fourths of investors in 2020, compared to roughly six in 10 in 2019, expressed concern about a U.S. economic recession over the next 12 months.
Likewise, more than three-fourths of advisors and financial professionals in 2020, compared to six in 10 in 2019, shared these concerns about a recession.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
