Blog: Investors Sitting at Home and Making Changes

4/13/2020

More than a month after the Coronavirus Crash, investors are reassessing their losses, working at home and evaluating what to do next. Maybe they are becoming used to the “new norm” and are trying to determine what will happen next and how they should position themselves for the future? Or maybe they are just bored?

In the April update to our report The Corona Crash: What Advisors Should be Saying to their Investors Now, Spectrem found that more than half of wealthy working households (with more than $100,000 net worth not including primary residence) are working from home. While only 2 percent have lost their job, 14 percent have had their hours cut back or are furloughed and another 14 percent are concerned about losing their job. This is a big change from a few months ago when investors were upbeat about their financial futures. In February, for example, two-thirds of investors indicated their financial situation was better than a year ago and 50 percent felt it would be even better in February 2021. Today only 31 percent indicate their financial situation is better than a year ago (who are they??) but 41 percent believe their financial situation will be better a year from now.

So what are all of these investors doing as they work from home? Compared to a month ago, many are making changes to their portfolios. In fact, 35 percent have made some type of change to their portfolios in the past six weeks compared to a month ago when 75 percent of investors indicated they had made no changes. While 15 percent of investors have sold equities in the past few weeks, 21 percent have taken advantage of some of the lower prices and have purchased equities. Changes to bonds/fixed income investments have not been as popular with investors. Note that wealthier investors have been much more active than less wealthy investors.

Investors are also talking to their financial advisors while they await the end of the “stay-at-home” environment. In fact, while half of investors have spoken to their financial advisors 1-2 times since February 15th, another 25 percent have spoken to their advisors three or more times. About half of investors indicated that their financial advisory firm has provided them with webinars, videos, podcasts and other digital educational materials and half of those investors indicate they have used these digital tools.

Investors are also watching the President’s daily updates on the coronavirus. More than a third (34 percent) watch frequently while 12 percent always watch. Another 37 percent indicate they sometimes watch the updates. Why is this important? Because investors will have specific questions when the economy begins to re-open and they will be looking to their financial advisors to guide them. This means financial advisors need to be prepared to assist their clients by taking advantage of opportunities but avoiding financial pitfalls.

Currently the future seems very uncertain. Financial advisors need to educate themselves about what is predicted to happen and carefully watch market reactions to various initiatives. Rough waters are ahead and investors will be looking for your expertise and guidance.