Investors Want Product Choices in Uncertain Markets

Developing differentiation in products is key to holding onto clients, while also developing new ones, especially in these tough times of volatile markets, recession fears and global uncertainty. 

Cerulli Associates discusses that difficult task in its latest report, “Global Markets 2023: A Changing World,” as well as the fact that investors worldwide understand that the period of asset growth and low interest rates that characterized the decade-plus bull run won’t return any time soon.  

"In the highly competitive U.S. market, product strategy and innovation are driven by the fact that many investment products are viewed as lacking differentiation,” wrote Cerulli. The financial consultancy believes financial professionals need to work harder to satisfy the needs and wants of individual investors by offering a broad selection of financial vehicles and providing “scalable solutions that can be customized at the individual investor level.” 

Easier said than done, of course.  

Protection in Uncertain Markets 

“Over the last couple of years, people have been looking for things that will provide them protection due to the volatility of the market and the increasing concerns over a recession and geopolitical issues,” Ashley Folkes, CFP, of Inspired Wealth Solutions in Hoover, Alabama, told etf.com. 

He also noted that “some flexibility” is very important to clients, which he’s found with ETFs: “ETFs offer so many different options today and even have the ability to put downside protection limits on losses if they occur. This gives advisors a way to lower the standard deviation.” 

CFP Brandon Gibson, wealth manager at Gibson Wealth Management in Dallas, also touted the benefits of ETFs in the differentiation realm: “I typically look for ETFs that are broadly diversified (to give me exposure to a target asset class) and widely traded (for liquidity and to keep costs down). Sometimes, I use ETFs for exposure to an alternative asset class, but in general, I’m wary of using a product that is based on some backtested strategy or is new (and thus thinly traded).”  

Cerulli’s report also noted that mutual funds showed resilience in 2022 in spite of the roiling markets. However, most financial professionals who spoke with etf.com see mutual funds in a steady decline, while products such as exchange-traded funds are moving ahead. 

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