When Volatility Is Positive

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Sentiment toward the Investment Environment Is More Volatile among Ready-to-act Investors … and That Is Good News for the Financial Services Industry

While volatility is generally not well received in the money management industry, in the case of investor sentiment, volatility signals a level of engagement from investors who are likely to make an investment move in the near future. This increase in engagement makes it easier for asset managers and distributors to connect with these ready-to-act investors, who are closely monitoring the impact of both political and financial market events.

Volatile investor sentiment also represents an opportunity for asset managers and distributors to reach an already engaged audience at a time when many firms are facing the challenges of record-low trust levels, decreasing brand awareness and low brand differentiation among affluent investors. Put simply, conducting any type of outreach with an engaged client or prospect is comparatively easier than getting the attention of someone who is focused elsewhere. The key lies in knowing how to harness the power of investor engagement to bring in new business.

In order to gauge investor sentiment and monitor important changes over time, Cogent includes a series of questions in our monthly Cogent Beat Investor survey. Respondents are asked to identify how they feel “right now” about the current investment environment. Later in that same survey, we identify the investors who are planning to open an investment account in the next three months, letting us isolate investors who are “ready to act.” When comparing investor sentiment during the 2016 presidential election cycle—perhaps one of the most unpredictable periods in recent US history—among ready-to-act investors and investors who don’t plan to open an investment account in the near future, some interesting findings popped.

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