Clients remain confident in advisors despite rocky markets: DALBAR

Following the Covid-19-related market crisis of 2020, investors with advisors seem more confident in their portfolios and professional financial relationships.

A new report from Boston, Mass.-based research firm DALBAR Inc. found the vast majority of investors polled (86%) said they’re significantly or slightly more confident in their financial professionals on the back of market volatility. Similarly, 87% said they trust their advisors more, while the same percentage said they’re more likely to retain those advisors.

The report is based on a survey that was conducted in August with nearly 1,000 North American investors. Respondents were asked about markets, their investing experiences and advisors, and overall satisfaction ratings were also calculated for groups of investors.

For example, looking at investors’ views on advisor confidence, trust and the state of their portfolios, the report noted that investors who followed their advisors’ advice to invest more during the recent downturn were most satisfied.

In comparison, investors who did nothing based on their advisors’ recommendation were less satisfied in their financial professionals.

The most common recommendation by advisors was to reallocate assets (34%), which was followed by 30% of investors. The second most common action was doing nothing — recommended by 29% and followed by 26% — and that was followed by investing more, only recommended by 23% of an advisors but an action that was taken by 28% of investors.

Fortunately, cashing out was the least common action taken by investors (15%) and recommended by advisors (12%).

It’s all about communication

Throughout the Covid-19-related market dip, the vast majority of respondents (82%) said they “received proactive communication.” However, nearly half (47%) also reported that their advisors didn’t reach out during the worst period.

For the 53% who did hear from their advisors when they needed it most, 20% said it was a one-time communication while 33% received multiple messages.

Email was the most common tool, at 79% of investors reporting their advisors used that. That compared to phone calls at 55% and text messages at 29%.

“Any proactive communication will significantly increase satisfaction on the part of the investor, regardless of frequency or timing,” the report said.

“Investors who received proactive communication reported a satisfaction score of 81 while those who did not receive proactive communication reported a satisfaction score of 56,” it added.

One tip offered was that a single “well-timed communication” can result in “the same investor satisfaction as frequent communications.”