Market Volatility Increases Investor Demand for Personal Communication from Advisors

Hello, 2012, goodbye “The Year of Volatility,” aka “The Year of Uncertainty.” And good riddance.

This, according to a recent SEI Quick Poll in which advisors said that compared to 2010, they communicated with clients more frequently and felt more pressure to satisfy their expectations. When asked what investors wanted more of in 2011, “personal communication” significantly outranked “reporting” or “education.”

The market swings throughout the year, advisors said, compelled many of their clients to reassess their risk tolerance. More than half of advisors (53 percent) said their clients’ mindset was best described as “apprehensive,” and that managed volatility was the most popular investment strategy last year.

“Everyone knows that the market volatility unnerved investors in 2011,” noted Steve Onofrio, managing director, SEI Advisor Network, in a statement. “But it also rattled financial advisors as well. While some were distracted by the market volatility, the best advisors continued to focus on what investors want and need—personal communication.”

Communication was also found to be key for millionaire investors Millionare Corner surveyed in a fourth financial quarter study of advisor relationships. Sixty-two percent said that not returning phone calls in a timely manner was the primary reason for leaving an advisor. Fifty-two percent said they would be compelled to leave an advisor who did not contact them proactively, while 45 percent bemoaned not having their emails returned in a timely fashion.

Market volatility was not the only source of concern for investors and advisors alike, the SEI poll found. Forty percent of advisors said that global instability was the top concern in 2011, with a majority of advisors keeping the closest watch on the unresolved eurozone crisis. They were equally divided on what kept them up at night between “running my business,” “the markets,” and “keeping my clients happy.” Only one-quarter of advisors said they slept well in 2011.

But out of worry came opportunity for advisors to grow their business. Forty percent said their firm grew by more than 10 percent in 2011 in net new assets, while 12 percent said their firm doubled that figure.

Nearly half (45 percent) said their top priority in growing their firm was to “strengthen existing client relationships.” Half of advisors said they “made great progress” on that goal. Thirty-eight percent said that, mirroring the market last year, they took “a few steps forward and a few steps back.”