Investors Relying More On Advisors Post Financial Crisis

Investors who sought guidance from an advisor during the 2008 financial crisis overwhelmingly found that advice to be more helpful than any they got from another source.

Thirty percent of respondents surveyed by Fidelity got help from a financial advisor during the crisis, and 90 percent of those investors rated that guidance as helpful, topping advice from any other source. As a result of the financial downturn, nearly one-quarter (23%) of respondents rely more on a financial professional now than they did in the past, according to Fidelity's Five Years Later survey.

The study reveals that 47 percent of respondents who worked with an advisor felt better prepared financially before the crisis, compared with 37 percent who did not use one. After the crisis, 66 percent felt better prepared, versus 53 percent of those who did not use one.

Five years later, the majority of respondents say they have altered their financial mindset and investment behavior. Fifty-six percent of investors believe that it’s their responsibility to prepare for retirement. Fidelity says this reflects an increasing shift in individuals’ recognition that they must take greater interest and control of their personal finances.

According to Fidelity, actions investors have taken to better prepare for their futures include:

• Forty-two percent have increased their contribution rates to their 401(k), IRA or health savings account, and more than half (55 percent) agree that they feel better prepared for retirement than before the crisis.
• Forty-nine percent said they have decreased their personal debt, and nearly three-quarters (72 percent) say they have less personal debt now than they did before 2008.
• Forty-two percent have increased their emergency fund, and 80 percent of those respondents say they have a better understanding of their finances now than before the crisis hit.  
• Sixty-four percent are more interested now, than before the crisis, in income products, such to provide a steady cash flow in retirement.

In 2008, when the financial crisis started, nearly two-thirds (64 percent) of investors reported they were either scared or confused, and nearly half (47 percent) said their household lost significant assets. 

Today, over half (56 percent) of investors feel confident about their financial condition, and those who use an advisor were more apt to say they feel the country’s economy is better now than 5 years ago.

Source:  Kathy Lynch, Financial Advisor Magazine

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

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