2020 Trends in Investing Survey also reveals ESG funds gaining popularity among the advisory community
COVID-19 is wreaking havoc across the country, especially in the financial markets and economy. With trillions of dollars in assets managed by the financial advisory community in the U.S., it’s logical to explore how financial advisers are feeling about the pandemic and their outlook for the economy. According to the 2020 Trends in Investing Survey by the Financial Planning Association, the Journal of Financial Planning, and Janus Henderson Investors, financial advisers are feeling bearish about the market and economic outlook for the next six months.
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This year’s survey, conducted annually since 2006, showed the pandemic is having a direct impact on the optimism advisers have for the economy’s short-term prospects. With President Trump declaring a national state of emergency on March 13—in the middle of fielding the survey—it provided an opportunity to see how advisers’ six-month economic outlook shifted almost immediately. Results from March 7-13 showed advisers were generally neutral or somewhat bearish, with just 12 percent bearish. After March 13, nearly one-third of advisers were bearish (31%).
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Another byproduct of the pandemic is the fact the survey pointed to financial advisers now opting for equities over cash and equivalents. Among the findings, 25 percent of advisers plan to increase their use of individual stocks, compared to 15 percent in 2019. Meanwhile, 14 percent of advisers said they plan to decrease their use/recommendation of cash and equivalents in 2020, compared to 5 percent who indicated so in 2019.
“It’s not surprising to see more advisers re-evaluating their asset allocation strategy,” said Adam Hetts, Global Head of Portfolio Construction and Strategy at Janus Henderson Investors. “The survey results rhyme with the unusually large volume of client inquires we’ve received since the COVID-19 sell-off began. An unprecedented market environment seems to have translated into an unprecedented amount of rebalancing and reallocation. What’s really different to me about this year is the humbling effect this sell-off has had on investors—portfolio losses once thought unique to the Global Financial Crisis have come back again. When once-in-a-lifetime losses become once-in-a-decade, everything changes.”
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