RJ and Makay

Despite all the gloomy news lately, financial advisors (FAs) remain steadfastly optimistic about the future, shows the latest quarterly research from Russell Investments. “The headlines seem to reinforce everything that's going wrong, but financial advisors who are more experienced are seeing a substantial amount of optimism,” says Kevin Bishopp, director of practice management at Russell's private client services business.

Russell's quarterly survey of about 800 FAs was conducted in late January and early February, so it doesn't reflect the unfolding disaster in Japan. But the political unrest that was sweeping across Africa and the Middle East when the survey was being done apparently wasn't enough to dim respondents' outlook.

Based on a recently published article by Financial Planning.com and according to findings from the latest Russell’s Financial Professional Outlook, financial advisors are turning to annuities, using tactical asset allocation, and continuing to move to fee-based business models as they cope with the sluggish economic climate. In addition, about 45% of advisors report decreased margins and increased investor risk aversion by moving transactional clients to fee-based accounts.

Given that some advisors began replacing lost business by shifting to transactional models, researchers were surprised that the move toward fee-based models sustained momentum during the market downturn, according to Phill Rogerson, managing director of consulting and client service for Russell Investments.

According to a recent survey by Russell Investments, many financial advisors are taking proactive steps to deal with slimmer margins and increasingly risk-averse clients.

Those polled include 348 advisors who reported many are making short-term changes to meet client demands for guaranteed income products and for implementing tactical market calls in response to growing market volatility.

Among the findings in Russell’s quarterly Financial Professional Outlook survey, 45% of advisors said they are shifting transactional clients to fee-based accounts, 39% are selling more annuities, and 26% are using new prospecting methods.