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How advisors are helping clients deal with volatility

Timely insights on the issues that matter most to investors.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Advisor Top-of-Mind Index, Tap into the perspectives of financial advisors

      Boston - Financial advisors are facing many challenges, including a changing regulatory landscape and the rise of automated "robo" advisors. However, a timeless way advisors can add value for clients is by preventing them from making emotional mistakes in volatile markets that can seriously derail their investment plans.

      As markets remain turbulent following the October sell-off, advisors can help guide their clients through the volatility.

      Indeed, volatility remains a top concern for advisors and their clients, according to the Eaton Vance Q4 2018 Advisor Top-of-Mind Index (ATOMIX) survey of over 600 financial advisors.

      "Now more than ever, clients need sound guidance, while the markets are sending mixed messages," says John Moninger, Managing Director of Retail Sales.

      "While our survey results indicated a sense of optimism about equity markets coming into the fourth quarter, October has brought some challenges resulting in few places to hide," Moninger adds. "Advanced advisors are taking advantage of market dips to identify longer-term value while preparing clients for rising rates.

      Advisors and their clients expect to see volatility continue due to several factors, as shown in the figure below.

      Blog Image ATOMIX Vol Nov 15

      Source: Eaton Vance Advisor Top-of-Mind Index (ATOMIX) Survey, Fall 2018.

      "Investors have adapted to higher volatility this year after an incredibly quiet 2017. A healthy dose of skepticism is appropriate, particularly with so many crosscurrents like global trade, inflation, interest rates and elections" explains Yana Barton, portfolio manager on Eaton Vance's growth team. "Every market environment creates winners and losers, and this one is no different. We believe volatility will remain elevated and active selection and diversification may offer the best defense for investors."

      According to the latest ATOMIX survey, key catalysts of market volatility include geopolitical issues and conflicts (28%), the U.S. political environment (26%) and the Federal Reserve's rate-hike decisions (22%).

      When describing their clients' mood, 44% of advisors described their clients as "anxious" when it comes to their investments.

      The survey also revealed these findings on client sentiment:

      • 78% of advisors reported having discussions with some clients about a looming recession.
      • 60% expect volatility to increase in the next six months.
      • 59% believe tariff-related actions globally will trigger increased volatility.

      To learn more about the Advisor Top-of-Mind Index and the latest quarterly survey, visit the ATOMIX page.