Natixis: Investors and Advisors Split on Return Expectations

Sep 29 2016 | 10:35pm ET

Investors and their advisors are still miles apart in return expectations, according to a new survey by Natixis Global Asset Management, although the vast majority of advisors are turning to tools such as liquid alternatives to diversify their clients’ portfolios.

Investors expect returns 44% higher than what financial advisors say is realistic, the survey revealed, while 85% of advisors say their success depends on gaining a more accurate picture of their clients’ risk tolerance

Natixis surveyed 300 financial advisors in the United States in July 2016 as part of the company’s broader study of 2,550 advisors in 15 countries. 

Key findings of the study include:

  • 86% of financial advisors say that meeting strict regulatory and disclosure requirements are some of the biggest challenges to the growth of their business
  • 37% say they will disengage with smaller clients due to new regulations.
  • 79% say new regulations will increase costs for investors
  • 76% say investors have a “false sense of security” about passive investing
  • 75% of advisors are using liquid alternatives to diversify client portfolios
  • The vast majority (86%) are not concerned that automated advice, i.e. robo-advisors, will make the traditional, high-touch advisory model obsolete

Echoing some of the frustrations among alternative investors, Natixis also found that managing investors’ performance expectations is a top priority for advisors, especially given that failing to do so is the top reason for investors to leave their advisors. 

“Low cost does not always equate to good value, and what’s lost in the big picture is the importance of professional guidance and risk management, especially in today’s complex and volatile markets,” said John Hailer, CEO of Natixis Global Asset Management for the Americas and Asia.

Based in Paris, Natixis Global Asset Management is one of the world’s largest asset management firms. Uniting over 20 specialized investment managers globally, the firm manages approximately $874 billion across a diverse range of investment solutions and strategies. It is part of Natixis, the international corporate, investment, insurance and financial services arm of France’s Groupe BPCE.

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