Advisor Economic Concerns Spur Interest in Diversifying Portfolios through Alternative Investments

September 14, 2022

Latest Cogent Syndicated Advisor Brandscape® report from Escalent shows advisor economic outlook, communication preferences

A new Cogent Syndicated report from Escalent shows financial advisors are growing increasingly pessimistic about the US economy with 79% considering the current conditions below optimal as of July. Inflation and rising interest rates stand out as key advisor concerns and are leading to an increased interest in alternative investments.

Those are the latest findings of Escalent’s Advisor Brandscape® report, which measures the impact of brand and loyalty on revenue in the advisor marketplace.

Looking ahead, one in four advisors (25%) think that US economic conditions will improve in the next three months. Meanwhile, one in three (33%) predict conditions will worsen, a lower proportion compared with June data (45%).

“Advisors and their clients are worried—yet during these uncertain times, asset managers have the opportunity to offer reassurance,” said Meredith Lloyd Rice, vice president in Escalent’s Cogent Syndicated division. “As momentum behind the enduring bull market wanes, we’re seeing advisors tilt away from a growth mindset and look for opportunities to diversify their clients’ investment portfolios to hedge against current economic concerns.”

In addition to the concern of inflation and rising interest rates, market volatility and economic slowdown are also a worry for advisors with market volatility concern up nine percentage points between March and July and concern around an economic slowdown up 16 percentage points. Conversely, advisors’ worry around geopolitical events (including the conflict in Ukraine) have receded.

Advisors express increasing interest in alternative investments as a way to modify and hedge against inflation and other economic concerns, directing particular attention towards real assets/commodities (29%), real estate/REITs (26%) and other alternatives (22%) as attractive investment opportunities.

Escalent also identified what advisors perceive as the most effective means of communication. 63% of advisors report external wholesaler meetings as the most effective way to engage with them, with email communication being the second most preferred among advisors overall at 58%. However, advisors in the broker/dealer channels and Registered Investment Advisors (RIAs) differ in their preferences somewhat—with broker/dealers more responsive to external wholesaler visits and internal sales/wholesaler phone calls and RIAs touting emails, webinars, provider websites and podcasts as effective communication methods.

About Advisor Brandscape®

Cogent Syndicated conducted an online survey with 1,386 registered financial advisors from January to March of 2022. In order to qualify, respondents were required to have an active book of business of at least $5 million and offer investment advice or planning services to individual investors on a fee or transactional basis. Cogent sets quota targets and weights the data to be representative of the overall advisor universe using the Discovery Data Financial Services Industry database as a sample source. Escalent will supply the exact wording of any survey question upon request.

To learn more about the report, click below.

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