Fear and uncertainty dominate the most recent Eaton Vance Advisor Top-of-Mind Index Survey

BOSTON, May 19, 2015 /PRNewswire/ -- Concerns about market volatility continued to trouble financial advisors and their clients, according to the latest results from the Eaton Vance Advisor Top-of-Mind Index Survey (ATOMIX), one of the largest quarterly surveys of financial advisors in the U.S.

Key ATOMIX survey findings:

• The Volatility Index measured 102.2, down from the 12-month high of 112.5 in January. However, volatility significantly outpaced other challenges, including generating income, growing capital and reducing taxes.
• Eighty-five percent of advisors said their clients remained wary of a market correction.
• Seventy-two percent of advisors believed their clients' investment decisions are motivated by fear.
• Sixty-one percent of advisors believed their clients viewed market volatility as a risk, not an opportunity.

These results marked the third consecutive quarter that volatility was reported as the dominant source of anxiety for advisors and their clients.    

"In the last six months, we've seen the energy markets cut in half and bounce back against a backdrop of lower-for-longer interest rates, unstable jobs data and tepid global growth driving a strong dollar," said John Moninger, managing director of retail sales at Eaton Vance. "It makes sense that advisors and their clients are anxious about how this affects their portfolios and hard-earned dollars."

With persistent concerns about uneven global growth and still-pending interest-rate moves, 85% of advisors said their clients remained wary of a market correction. The ATOMIX survey also found that nearly three-quarters (72%) of advisors believed their clients' investment decisions were motivated by fear.

Kathleen Gaffney, CFA, co-director of diversified fixed income at Eaton Vance, wasn't surprised. "Right now, investors are witnessing U.S. Treasury yields near all-time lows, corporate bond spreads that appear expensive and an equity market at or near historically high levels. This can be frustrating, especially for investors who are anxious to find consistent income streams."

Gaffney added that in the current market cycle, investors must thoroughly review their asset allocations and look to managers with proven track records in finding hidden value.

Edward Perkin, CFA, chief equity investment officer at Eaton Vance agreed. "History suggests investors don't always behave rationally when it comes to gyrations in the market. It's crucial to act prudently and be well-diversified across asset classes to protect capital, hedge downside risk and capitalize on mispricings in the market."

Perkin noted it is often rewarding to take a contrarian view, practice discipline and examine a broad range of factors when looking for value. "Bargain hunting is not a group activity. It's vital for money managers to do the research and get to the root of what is driving volatility to identify the right opportunities for long-term investment success."

ATOMIX survey results showed that six out of 10 (61%) advisors believed their clients view market volatility as a risk, not an opportunity. Moninger said this risk is best understood and managed, not avoided.

"Periods of volatility can provide significant upside for investors who take a long-term investment approach," he said. "While wealth protection is always a concern, it's important to keep in mind that volatility also can create an opportunity for outperformance."

According to the ATOMIX survey, advisors' concerns about income rose to 96.3 from 93.3 last quarter, while concerns about taxes declined to 73.2 from 83.5 quarter over quarter.

The fact that taxes measured lower as the April 15 deadline approached may seem counterintuitive, but it suggests that investors have become complacent about the higher tax rates instituted in 2013, according to Moninger.

"Taxes are an inevitable part of investing, but a client's effective tax rate is not," said Moninger. "Some advisors may have lessened their focus on tax-efficient tactics, which creates an opportunity for the best advisors to use all the tools at their disposal to minimize taxes not just when Tax Day approaches, but 365 days a year."  

Eaton Vance's quarterly Advisor Top-of-Mind Index (ATOMIX), one of the largest quarterly surveys of financial advisors, is part of an ongoing study initiated in April 2014 to measure the overall importance of key issues facing advisors and their clients, combined with how fast these issues are increasing in importance.

Eaton Vance Advisor Top-of-Mind Index Methodology The Advisor Top-of-Mind Index is calculated based on the findings of a survey of 1,002 financial advisors from a diverse group of companies. Eaton Vance contracted with a third party to conduct the online survey from March 23 – April 16, 2015. The Advisor Top-of-Mind Index uses a similar methodology as the U.S. Consumer Confidence Index* (which has no affiliation with Eaton Vance) in that it calculates a weighted average of current perceptions (40% of the Index) and what advisors think about the trends (60% of the Index). The Index set a baseline average of 100 for April 2014. Each component measured is tracked quarterly to illustrate changes in advisor perceptions and changes in trends over time. Future surveys will sample different financial advisors and may produce different results.

Eaton Vance Corp. (NYSE: EV) is one of the oldest investment management firms in the United States with a history dating to 1924. Eaton Vance and its affiliates managed $303.4 billion in assets as of March 31, 2015, offering individuals and institutions a broad array of investment strategies and wealth management solutions. The Company's long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today's most discerning investors. For more information about Eaton Vance, visit eatonvance.com.  

* The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The Consumer Confidence Index was started in 1967 and is benchmarked to 1985=100. The Index is calculated each month on the basis of a household survey of consumers' opinions on current conditions and future expectations of the economy. Opinions on current conditions make up 40% of the index, with expectations of future conditions comprising the remaining 60%.

For more information, please contact us at:  Eaton Vance Distributors, Inc. Member FINRA/SIPC Two International Place Boston, MA  02110 800-836-2414 eatonvance.com

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SOURCE Eaton Vance Corp.