{"id":351410,"date":"2018-06-14T11:30:12","date_gmt":"2018-06-14T15:30:12","guid":{"rendered":"https:\/\/www.investmentexecutive.com\/?p=351410"},"modified":"2019-07-22T14:05:27","modified_gmt":"2019-07-22T18:05:27","slug":"the-biggest-challenge-advisors-may-face-is-managing-clients-emotional-reactions","status":"publish","type":"post","link":"https:\/\/www.investmentexecutive.com\/news\/industry-news\/the-biggest-challenge-advisors-may-face-is-managing-clients-emotional-reactions\/","title":{"rendered":"The biggest challenge advisors may face is managing clients\u2019 emotional reactions"},"content":{"rendered":"

Higher levels of market volatility, interest rate hikes and possible asset bubbles are all predicted to negatively affect investment returns this year, yet\u00a0 the biggest challenge advisors might face is managing clients\u2019 emotional behaviour, according to a recent report published by Toronto-based Natixis Investment Managers Canada LP.<\/p>\n

The Natixis Investment Managers 2018 Global Financial Professionals Survey reveals that 94% of Canadian financial and investment advisors say that preventing clients from making investment decisions based on their feelings is important to their success. Furthermore, 34% of advisors say their clients reacted emotionally to recent market movements and only 43% of advisors believe investors are prepared for a market downturn.<\/p>\n

Financial advisors have a tough road ahead of them in helping clients prepare for financial obstacles. Specifically, advisors see rising volatility as the largest threat to the markets. Seventy-three percent say it would negatively affect overall performance, followed by asset bubbles (63%), geopolitical events (57%), unwinding of quantitative easing (57%), interest rate increases (56%), low yield environment (55%), regulation (43%), and currency fluctuations (41%).<\/p>\n

Advisors are also wary of central bank short-term interest rate increases. Approximately 75% say this will adversely affect the housing market, credit market (71%), bond volatility (68%), overall market volatility (65%), consumer spending (62%) and economic growth (53%).<\/p>\n

\u201cWhether it is buying indiscriminately when markets are rising or selling in a panic when they are declining, investors often make their worst decisions when driven by their emotions,\u201d says Abe Goenka, CEO of Natixis Investment Managers Canada, in a statement.<\/p>\n

\u201cAdvisors have an important role to play in all markets, helping investors to be aware of the harm emotionally driven investing can cause and assisting them in dispassionately examining their goals, risk tolerance and timeframe. Our research shows they are increasingly turning to active managers for the tools and flexibility to diversify their clients\u2019 portfolios and reduce risk.\u201d<\/p>\n

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