Financial Planning: “Study finds large differences between client and advisor market perceptions”
Financial Planning, July 28, 2021 — “Clients think they understand how to invest — but their advisors don’t agree, a new study found,” explains reporter Cynthia Fernandez in today’s issue of Financial Planning.
In fact: Investors were three times more likely to say they were knowledgeable about the markets as their advisors, according to the second annual Investments and Wealth Institute’s 2021 Investor Behavior in a Market Crisis report, which found that there are often disconnects between investors and advisor perceptions about the market.
“This is really important because without understanding these differences advisors may not be able to provide the support that clients need to implement their financial plans and stay focused on their long term financial goals, and clients may not make decisions that are in their best interests,” says advisor Marguerita Cheng, founder, and CEO of Maryland-based Blue Ocean Global Wealth.
One interesting finding: women, older clients, and clients with less wealth are consistently more likely to respond “I don’t know” on questions related to maximum losses. This reflects their self-perception that their knowledge is lower, according to the study, she says.
“Is it a situation where women are more comfortable acknowledging lack of investment knowledge or is their knowledge lower?” asks Cheng. “There is certainly an opportunity to provide more engaging and relevant investor education to women. More knowledge about investments can help improve financial confidence.”