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Last week, Spectrem Group completed research with investors regarding their attitudes and reactions to the coronavirus crash for our report, The Corona Crash: What Financial Advisors Need to Say to Investors Now. The findings were fascinating and led to the conclusion that institutional investors are primarily driving market volatility while retail investors are sitting tight and holding on for the long term. In that research, Spectrem specifically asked investors if they had bought or sold equities in the last few weeks.
As you can see, for the most part, investors are not selling securities, however, not a substantial amount are buying. Those who are most likely to be buyers are the wealthiest investors. Almost half of the wealthiest households are currently buying equities.
It’s important for financial advisors to share this information with their clients. If they can see that other investors really are holding on for the long term, it may convince them to do the same. It may encourage them to actually become buyers if that is appropriate for their portfolios.
In fact, most investors believe that the market will eventually bounce back - maybe not to the levels it was at prior to the crash but perhaps at least higher than the levels currently experienced. A similar percentage of investors believe the market volatility will continue at least through the November election.
Clearly, investors are concerned about the impact of the coronavirus, however, most investors believe that the coronavirus will eventually become a non-issue. Some investors believe that the media is hyping the impact of the coronavirus and making it worse than it needs to be.
Financial advisors need to continue to proactively reach out to their clients. As the market volatility continues, their confidence may continue to erode. Since most investors are working at home, they may have more time to chat with their advisor - or communicate via email or other communication modes. This is the time to increase your importance to your clients by ensuring them that you are looking out for their best interests. Good luck to all.