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 401(k) Specialist and 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. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.
