COVID-19: Weekly Client Update
April 07, 2020
The past several weeks have created a new normal. We instituted our full-scale business continuity operations just at the moment when the market volatility was spiking. We are focused on keeping our 4,000-plus employees safe and healthy, while at the same time working incredibly hard to make sure we are serving you effectively. We are monitoring updates and taking guidance from government and health officials, and adapting our business continuity efforts as warranted and necessary.
Helping You & Your Clients Navigate This Period of Uncertainty & Volatility
We are dedicated to providing you, our advisor partners, with the tools and intelligence you need to deliver the level of service your clients have come to expect. Our employees across the globe are handling service requests, enhancing our technology, and managing day-to-day operations while working from home.
Our business continuity planning has allowed us to seamlessly support you and your clients during this time. The high trading and processing volume we have been experiencing has normalized over the past five business days. Trading volumes have moderated from 140 percent above normal at the end of March to about 80 percent above normal at present. Across the board, in every area, we continue to see higher-than-average volumes, but those are stabilizing, and our team is adapting to the new level of demand.
As part of our ongoing commitment to ensuring a successful transition, we are providing you with insights from our in-house experts into market developments over the past week—and crucially, what our data says about advisor activity, and attitudes toward capital and risk. This market intelligence can help you effectively service your clients and manage your practices during this unprecedented shutdown.
- The first quarter of 2020 officially ended, and the COVID-19 outbreak caused global equities to experience their worst quarterly performance since 2008.
- President Trump signed into law a $2 trillion stimulus package on Friday, March 27, which will definitely help the economy, though it may take some time before its impact is felt.
- This was a record-setting quarter, with the VIX closing at a record high of 82.69. It took just 16 days, the fastest period in history, to enter a bear market. Also, 3.3 million Americans filed unemployment claims, the largest number on record and an increase of approximately 3 million since the week ending March 14, when 282,000 people filed claims.
- We have observed that advisors remain very active making small changes to client portfolios, harvesting tax losses, and fine-tuning risk tolerances, while generally keeping clients invested to meet their objectives.
- Advisors continue to work hard to help clients update their risk tolerances, and although overall trading volume by dollar amount is down by roughly 50 percent compared to the previous week, the volume is still 200 percent of the weekly average year-to-date.
- Envestnet believes the majority of trading is related to advisors changing risk tolerances for clients, and helping clients become more tax-efficient by harvesting capital losses.
- We see no signs of irrational buying or selling, and we believe advisors have been able to manage client expectations consistently.
Thankfully, our data suggests clients are highly satisfied with how their advisors have been working through the present crisis. Client investment account contributions and withdrawals are running about average when compared to activity over the past 18 months—and we see no change in the hiring or firing of advisors.
How Can We Help?
On behalf of the entire Envestnet organization, I thank you for putting your trust in us. We are here to help you and your clients successfully navigate this crisis. Please reach out to us with any questions or concerns, and we will respond as soon as we can.
Thank you again. I hope you and your families stay safe and healthy.
Chief Executive Officer