He expressed his opinion that wealth managers who use options are seeing an increase in their client portfolio as compared to those who do not use options.
To back the point, Cott referred to a study on Financial Advisor Benchmark Study conducted by the Options Industry Council (OIC) with Bellomy Research. According to the report, options usage among advisors is on the rise and advisors who use options tend to have more assets under management than non-users.
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More than 600 advisors throughout the US were interviewed and it found that nearly half of wealth managers (48%) used options in the last year for their clients.
Additionally, more than a third of financial advisors who use options increased their use of options over the past few years, and one in three say they intend to increase it going forward.
Wealth managers are using options primarily for income generation and hedging in the wake of the market conditions, and they are very often doing so at the request of their clients.
Cott adds; "They are mainly used to generate, usually with covered calls. That is followed by hedging an existing portfolio. After that, they are mainly used to acquire stock at a later date and diversify a portfolio; locking in profits on existing investments and lastly speculation then round out the top five uses."
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By GlobalDataCott was joined by Margaret Rorick, vice-president of financial services research for Bellomy Research that had conducted the Financial Advisor Benchmark Study for OIC.
