Tools for Advisors: Client-Facing Lessons From 2020 | ETF Trends

Both the world and markets have changed a lot since the outbreak of COVID-19 in 2020. 2020 threw the U.S. and the world for a loop, and advisors had to adjust not only to a rapidly shifting market but also to interacting with clients virtually to address all kinds of new priorities and needs. New research from WisdomTree’s Ryan Krystopowicz, director of client solutions, takes a look at the lessons from 2020 and the tools for advisors out there that can help advisors meet clients’ needs.

Advisors would likely believe that investor risk appetite decreased following the initial crash and lockdowns in 2020 — but per the study at the center of WisdomTree’s new research, this is not the case. The frequency of investors checking their portfolios’ performance did not increase “significantly” after the 2020 crash, and investor satisfaction with the frequency of advisor check-ins increased. Notably, the number of investors who felt comfortable tolerating fluctuations without selling also increased.

But that consistency and even increased trust in advisors during the 2020 volatility did not just happen on its own — advisors were able to build on existing relationships to help investors stay confident in their long-term plans. Advisors increased communication with clients and were made more confident by planning in part through the use of third-party models.

See more: “Model Portfolios for Clients: Finding the Right Fit

Before 2020, 86% of investors believed that an advisor using third-party model portfolios was “absolutely acceptable,” and that number rose to 90% after the initial crash in 2020. There was a 7% increase in the number of investors who believed that models would have a positive impact on their overall portfolios in that time, as well.

Overall, responsiveness from advisors was rated much more highly after the crash than before COVID-19 arrived. The importance of advisors’ ability to move quickly with a client’s portfolio jumped by 20% among those clients surveyed between the start and end of 2020. With a variety of ETFs out there, it may also be worth revisiting how to use VettaFi’s ETF Screener to quickly identify the right ETF exposures to meet that client demand for responsiveness.

Understanding how clients want their advisors to react to uncertainty could be very useful this year as rate hikes and recession risks linger as key issues. Advisors are always learning, but it’s worth it from time to time to take a moment and reflect on what clients really need and the tools for advisors available to help them.

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