While crisis-level activity has largely subsided, advisors remain very active relative to "normal" levels of activity we saw during the bull market run.
During these volatile market swings and stay at home orders for investors, advisors remain very active. Investing activity last week was still two times average transaction volume as compared to the past 18 months. While the equity markets showed strong performance last week, advisors remained in a neutral risk stance. Cash as a percentage of portfolio dropped to 5% from 6.2%, a nearly 20% drop in cash allocations.
Advisors are very slowly reducing cash levels. Their attitude toward risk is neutral, repeating last week's trend, in that both risky and non-risky assets saw nearly zero net flows.
Advisors remain very active making small changes to client portfolios, harvesting tax losses, and fine tuning risk tolerance, while generally keeping their clients invested to meet their objectives.
Imagine you knew exactly which stocks to pick a decade ago, the ones that would do best during the rally. What would life have been like on the way to world-beating gains. This quarterly industry report excerpt explains why even God would get fired as an active manager.
State of the RIA Market: Special Focus on the Investor/Advisor Relationship and Advisor Technology Stack
As a valued Envestnet Institute user, we are delighted to share with you our latest report on the State of the RIA Market.
One of the biggest challenges in investing is to stay focused and on course. Investors must look at the markets from a historical perspective for broader context, and to better understand why it is important to stay the course during both calm and perilous markets.
The Envestnet Institute glossary provides key wealth management terms and definitions for clients and those new to the industry.