New Investor Research by Investments & Wealth Institute and Toews Asset Management Provides Unique Insights into Investors’ Behavior and Perception Under Extraordinary Market Conditions
New investor research highlights impact of global crisis on investor confidence and where advisors can provide support through practical behavioral finance strategies.
Investments & Wealth Institute
released a new special report on behavioral finance, Investor Behavior in a Market Crisis
in partnership with Toews Asset Management
. The new investor report is part of the omnibus research 2020 Investor Research.
Fielded against a looming economic recession and a global pandemic in March 2020, the research took a close look at investor behavior in prior market turmoil, investor confidence, their view of their advisor relationship, and actions they took or might take with their portfolios.
The research, conducted by Absolute Engagement
, gathered input from 751 investors in the United States between March 10 and March 26, 2020. All respondents worked with a financial advisor, made, or contributed to the financial decisions in their household, and met specific requirements regarding household investable assets.
Overall, investors were extremely optimistic towards the future despite the market decline. Looking ahead for the next 12 months, half of investors expect to see positive rates of return in their portfolios while only one-third expect to see declines. Except where there may be extreme market declines of 50% or more, investors seem secure about their future, their retirement, and their advisors.
The research also highlighted where investors need additional support. The data indicated that advisors could do a better job providing more clarity on their advisory and investment plans. With only two-thirds of investors feeling like they have a clear plan of action for their portfolios in periods of severe market declines. There is value and peace of mind in having strong plans, but many investors did not find these plans to be clear. Investors are more confident when the relationship with their advisor is strong and communication is clear.
“The fortuitous timing of the 2020 Investor Research survey provides a unique look at investors’ behavior under extraordinary conditions. Advisors need to understand how to better manage investor behavior in stressful times, or these behavioral biases can have a disastrous impact on client outcomes, particularly in a recessionary climate,”
said Sean R. Walters, CAE, chief executive officer, Investments & Wealth Institute. “Our annual Investor Research includes a special report this year that informs advisors on the behavioral biases and influences affecting clients, and how advisors can help minimize investors’ bad decisions.”
“These findings of our study show that incorporating behavioral finance into your practice is incredibly important, now more than ever,”
remarked Felipe (Phil) Toews, chief executive officer of Toews Asset Management. “It’s not enough to use “set it and forget it” plans with clients anymore. We want advisors to understand the intricacies of communication and behavior. This allows them to foster better relationships with clients, especially during challenging times. We are helping advisors create dynamic frameworks around the financial planning and guidance processes so their clients can know they have a plan in place before negative events occur, which is what these findings show clients want.”
To read the full report: www.iwicentral.org/2020BehavioralResearch
For a more in-depth exploration of the results attend part one of the upcoming Exceptional Advisor webinar series, Practical Strategies for Managing Investor Behavior
June 4, 2020 at 4:30-5:30 pm ET. The series will include a discussion of the research results by Julie Littlechild of Absolute Engagement, with implications on portfolio and behavioral guidance examined by Phil “Felipe” Toews, Eben Burr, and Dan Kullman of Toews’ Behavioral Investing Institute. To learn more and register for the June 4, 2020 webinar visit: www.investmentsandwealth.org/practicalstrategiesinvestorbehavior
For additional information, contact Devon Coquillard, communications manager, email@example.com
or (303) 850-3202.
The study was commissioned by the Investments & Wealth Institute and conducted by Absolute Engagement and included input from 1,178 respondents, via online survey, between March 10 and 24. This report focuses on the 751 respondents from the US; Canadian results are being released separately. All respondents work with a financial advisor, make, or contribute to the financial decisions in the household and met defined investable asset criteria
Toews Asset Management
is an SEC-registered investment advisor founded in 1994. Most investors hope to avoid losses and realize growth. Toews builds portfolios that primarily seek to reduce risk of loss in crisis environments, as well as attempt to participate in market gains. Our process is not based on subjective or predictive methodology. It has used a heavily researched and price-reactive algorithm since 1996 that provides a signal for investment exit and re-entry points.
For more information, visit www.toewscorp.com
Toews offers behavioral finance training for advisors through workshops, seminars, and coaching through its Behavioral Investing Institute
. The Behavioral Investing Institute’s workshops and seminars provide implementation ideas that may enable the audience to improve on their ability to recondition their clients’ perception and emotional response to various market cycles. Our one-year coaching program guides advisors through a training framework that seeks to change investors’ default emotional responses to various market challenges. Each student in the coaching program will have ongoing access to their personalized behavioral guidance tools and analysis, as well as stay current on the ongoing evolution of our tools as they develop. Upon completion of the Behavioral Finance Coaching Program, financial advisors become part of a community of investment professionals committed to ongoing learning in the field of behavioral finance. For more information, visit www.biicoaching.com.
About Investments & Wealth Institute®
Investments & Wealth Institute
is a professional association, advanced education provider, and standards body for financial advisors, investment consultants, financial planners, and wealth managers who embrace excellence and ethics. Through our events, continuing education courses, publications, and acclaimed certifications—Certified Investment Management Analyst® (CIMA®)
, Certified Private Wealth Advisor® (CPWA®)
, and Retirement Management Advisor® (RMA®)
—we deliver rigorous, highly practical education. The Institute is committed to improving the professionalism of its members through educational and certification programs. We support high standards of professional conduct and deliver Ivy League-quality education with real-world practical application to advance the advisory profession and provide better outcomes for the investing public.
For more information, visit www.investmentsandwealth.org
About Absolute Engagement
Absolute Engagement is an organization that prides itself on being an expert in elevating the client experience and helping advisors drive practice growth. Founder and Chief Executive Officer, Julie Littlechild, is a recognized expert on the drivers of client engagement and a popular speaker on how client experience is being disrupted and how to leverage those trends to drive referrals. Ms. Littlechild has presented at numerous Institute events, both in-person and online. She has worked with and studied successful financial advisors and their clients for more than twenty-five years. Previously, Ms. Littlechild launched and ran one of the industry’s leading research firms, focused on client engagement. She is the author of a popular blog, the co-host of the Becoming Referable
podcast and the author of The Pursuit of Absolute Engagement.
For more information, visit www.absoluteengagement.com.
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