Volatile markets a good time for advisors to prove their worth

“The markets have been so strong over the past 8 to 10 years that it’s been easier to be right about investment choices. Individual, do-it-yourself investors have had a higher probability of being successful,” says Douglas, who spoke at the Advisor Forum and Top Performers conference in Toronto. “If the volatility we’ve seen in the last while continues, it will be that much more difficult to have the right information to make all the right decisions. That’s where full-service advisors come in.”

Douglas describes the advisor as an “information broker” for his or her client — a sort of go between for investment products, and dealers, and the performance of those investment dealers and their products. He notes the advisor’s job is becoming increasingly difficult, with more than 3,000 mutual funds, plus segregated products. “I think it must be frightening, the amount of information you receive from fund companies — all 70 of us,” admitted Douglas.

In that way, the Internet provides and opportunity, said Douglas during his speech, entitled “Are We Ready for Tomorrow’s Reality?” If the advisor can weed through all the consumer information, market research, and economic information for the client, the relationship will grow.

Despite all the noise about the net, clients may take between 5% to 10% of their portfolios to a discount, on-line brokerage, Douglas said, citing a survey conducted by Boston-based Cerulli Associates. Advisors can work with the other 90% to 95% of the funds, and ask their clients what services and information they can provide them to help them through the volatility.