WAYNE, Penn.--(BUSINESS WIRE)--New survey data released today from Hartford Funds reveals a disconnect between advisors and the general population when it comes to preparing for and anticipating a potential bear market. With emerging markets and many individual U.S. stocks approaching bear market territory, the findings highlight a significant opportunity for financial advisors to educate their clients on the necessary preparation for a bear market.
Understanding and Anticipating a Bear Market
According to survey findings, an overwhelming majority (70 percent) of Americans cannot identify a bear market as being related to a declining stock market. While those who work with financial advisors are better informed, more than half (56 percent) are still in the dark.
Regarding timing, most of the general population (68 percent) anticipates that a bear market will occur within the next year. Contrastingly, almost all advisors (77 percent) expect a bear market to occur after July 2019, and nearly a third (31 percent) do not expect a bear market before 2020.
Americans who currently work with an advisor are more pessimistic, with nearly half (49 percent) anticipating a bear market between now and June 2019. Among Americans who have never worked with an advisor, more than half (61 percent) believe a bear market will likely hit in the second half of 2019 or later.
Emerging from the recent midterm elections, advisors and Americans are split on the impact politics will have upon a potential bear market. Advisors (50 percent) and Americans who have never worked with an advisor (32 percent) do not anticipate that politics – such as the midterm elections – will affect when a bear market hits. However, most Americans who currently work with an advisor (83 percent) believe politics will influence market performance, of whom only 13 percent expect that an even split in Congress would make a bear market more likely.
“The limited education of the general population on the investing landscape presents an important opportunity for advisors,” said John Diehl, Senior Vice President of Strategic Markets at Hartford Funds. “Educating clients is a crucial component of effective human-centric advice and helps ensure they are prepared for any changes in the market, while also increasing the advisor’s potential to bring on new clients through word-of-mouth referrals – the most powerful business development tool available to advisors.”
Preparing for a Bear Market
Though advisors almost unanimously (89 percent) say they have discussed preparing for a potential bear market with their clients, the clients tell a different story. In fact, less than half (43 percent) of Americans working with an advisor claim they have discussed bear market preparation with their advisor.
Among Americans who have never worked with an advisor, a vast majority (91 percent) have not had a conversation about preparing for a bear market with anyone, including financial advisors, family or friends. However, Americans who have worked with an advisor in the past are five times more likely than those who have never worked with one (45 percent and 9 percent respectively) to discuss a bear market with someone in their network.
Of those who were invested in the market in 2007, more than a third (36 percent) feel better prepared for a potential bear market overall, with 19 percent feeling somewhat better prepared and 17 percent feeling much better prepared. Americans who currently work with an advisor are more than twice as likely as those who have never worked with one to say that they are better prepared for a bear market today than in 2007 (68 percent and 26 percent, respectively).
“Proactivity is the key to effective advice as clients look to advisors to see around corners and anticipate potential changes that may affect their portfolios,” continued Diehl. “Preparation is vital in protecting client assets and it is critical that advisors continue actively engaging their clients to provide dynamic and thoughtful counsel to help them navigate a potential market downturn.”
More information on investor guidance and preparing for a bear market can be found on Hartford Funds’ website.
Methodology
The survey of 1,005 adults ages 18 and older was conducted online by Engine’s CARAVAN®. The survey of 121 advisors was executed in-person during October 2018.
About Hartford Funds
Founded in 1996, Hartford Funds is a leading asset manager, which provides mutual funds, ETFs, and 529 college savings plans. Using its human-centric investing approach, Hartford Funds creates strategies and tools designed to address the needs and wants of investors. Leveraging partnerships with leading experts, Hartford Funds delivers insight into the latest demographic trends and investor behavior.
The firm’s line-up includes more than 55 mutual funds in a variety of styles and asset classes, as well as a variety of multifactor and active ETFs. Its mutual funds (with the exception of certain fund of funds) are sub-advised by Wellington Management or Schroder Investment Management North America Inc. The strategic beta ETFs offered by Hartford Funds are designed to help address investors’ evolving needs by leveraging a unique risk-optimized approach, which identifies risks within each asset class and then deliberately and systematically re-allocates capital toward risks more likely to enhance return potential. Excluding affiliated funds of funds, as of September 30, 2018, Hartford Funds Management Company, LLC and its wholly owned subsidiary, Lattice Strategies LLC, had approximately $121.1 billion in discretionary and non-discretionary assets under management. For more information about our investment family, visit http://www.hartfordfunds.com.
Investing involves risk, including the possible loss of principal.
Investors should carefully consider a fund’s investment objectives, risks, charges and expenses. This and other important information is contained in the fund’s prospectus and summary prospectus, which can be obtained by visiting hartfordfunds.com. Please read it carefully before investing.
Mutual funds are distributed by Hartford Funds Distributors, LLC (HFD), Member FINRA. Exchange-traded products are distributed by ALPS Distributors, Inc. (ALPS). Advisory services are provided by Hartford Funds Management Company, LLC (HFMC) and its wholly owned subsidiary, Lattice Strategies, LLC (Lattice). Certain funds are sub-advised by Wellington Management Company LLP or Schroder Investment Management North America Inc. Schroder Investment Management North America Ltd. serves as a secondary sub-adviser to certain funds. Hartford Funds refers to HFD, HFMC, and Lattice, which are not affiliated with any sub-adviser or ALPS.
HIG-W
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in The Hartford’s Quarterly Reports on Form 10-Q, our 2017 Annual Report on Form 10-K and the other filings The Hartford makes with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued. From time to time, The Hartford may use its website to disseminate material company information. Financial and other important information regarding The Hartford is routinely accessible through and posted on our website at http://ir.thehartford.com. In addition, you may automatically receive email alerts and other information about The Hartford when you enroll your email address by visiting the "Email Alerts" section at http://ir.thehartford.com.
