The Markets January 3, 2023

Doll Forecasts A ‘Shallow’ Recession in 2023

Market guru Bob Doll of Crossmark believes a mild recession is imminent due to the Fed’s continued monetary tightening to try and tame inflation.

Reported by


Crossmark Global Investments CIO Bob Doll has weighed in with his 10 market predictions for 2023, including a “shallow recession” spurred in large part by the Federal Reserve’s quest to tame inflation.

In his annual predictions, Doll said the main focal points for 2023 will be the Fed’s monetary tightening policy, along with corporate earnings. He predicts economic weakness will come in part from the delayed impact of the Fed raising rates in a relatively short period of time last year, along with the likelihood of further hikes to 5% or more for the balance of 2023.

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“We acknowledge that the Fed could blink and acquiesce to a 3-4% inflation ‘for the time being,’ in which a soft landing might be possible,” Doll wrote. “But if the Fed insists on their 2% target, a recession is almost inevitable.”

Doll does see inflation declining “substantially,” but not to the 2% target being sought by the Fed over the long run. Despite the likely impact of higher interest rates, he sees the recession as mild due to “the cash on corporate balance sheets, a reasonably healthy corporate sector, and a relatively stronger banking system.”

In 2022, everyday 401(k) and 403(b) savers saw portfolio declines of 21% or more, according to some measures, as both stocks and bonds had negative returns for the first three quarters. Meanwhile, retirement plan withdrawals have hit their highest level since 2004, as workers seek to manage rising costs, Vanguard said in November.

Doll predicts the “lows of last October” for stocks to return this year due to economic growth fears, talk of recession and negative earnings revisions. Bonds, however, will rally during this period, he said, with the potential for a reversal later in the year as prospects pick up for 2024.

He believes corporate earnings will be revised downward as revenue growth slows and operating leverage puts pressure on profit margins.

Doll also weighed in on international trends, as well as politics, including a prediction of a double-digit field of U.S. presidential candidates as the Biden administration moves into its third year.

Doll’s full list of 10 predictions are:

  • The U.S. experiences a shallow recession, as real GDP will be among the lowest 10 of the last 50 years.

  • Inflation falls substantially, but remains above the Fed’s target of 2%.

  • The Federal Funds Rate reaches 5% and remains there for the balance of the year.

  • Earnings fall short of expectation in 2023 due to cost pressures and revenue shortfalls.

  • No major asset class is up or down by a double-digit percentage for only the fourth time this century.

  • Energy, consumer staple and financial sectors outperform utilities, technology and communication services as value beats growth.

  • The average active equity manager beats the index in 2023.

  • International stocks outperform U.S. ones for the second year in a row (first time since 2006 and 2007).

  • India surpasses China as the world’s largest population and is the fastest growing large economy.

  • A double-digit number of candidates announce they will run for U.S. president.
Last month, Doll gave himself a 7.5 out of 10 on his investment predictions for 2022. He said that was roughly in line with his long-term average of 7.0 to 7.5 out of 10.
Deals & People January 3, 2023

Gallagher to Continue Push Into Retirement Advisement in 2023

Insurance powerhouse Gallagher’s pending acquisition of Buck will further its strategy of providing the full scope of financial planning to group plans and participants, its retirement head tells PLANADVISER.

Reported by


Arthur J. Gallagher & Co., one of the world’s largest insurance brokerages, will push further into the retirement plan advisement space in 2023 on its march toward providing more holistic financial services, according to one of its practice leads.

The Rolling Meadows, Illinois-based insurance brokerage, risk management and consulting firm is working to complete a $660 million acquisition of the partnership interests of Buck, a New York-based retirement, HR and employee benefits provider, by the first half of 2023.

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The acquisition will add to Gallagher’s recent focus on providing the full scope of group plan offerings, including defined benefit and contribution retirement plans; institutional investment consulting; and executive benefit solutions, says Jeff Leonard, Gallagher’s financial and retirement services practice lead.

“From a plan sponsor’s perspective, [the acquisition] pulls everything together in the group retirement space,” Leonard says.

The addition of Buck comes alongside numerous insurance tuck-in acquisitions by Gallagher this year, as well as deals for human resource and executive search firms. Gallagher also sealed a deal for f3 Companies in October, a “turnkey” asset management and retirement planning platform for use by registered investment advisers and individuals.

The trend toward offering full service insurance, HR, retirement, and wealth management mimics other insurance brokers in the space, such as Hub International and Marsh McLennan. The strategy has gained even more credence since the pandemic has made providing robust benefits including retirement plans crucial to draw and retain talent, according to surveys and industry sources.

Although Gallagher did not disclose the terms of the Buck deal, it confirmed it will bring f3’s more than $1 billion in assets under advisement (AUA) into Gallagher’s more than $100 billion in retirement and financial assets.

Adding Buck’s services, Leonard says, will provide a strong defined benefits focus to build on Gallagher’s own DB services, as well as bring in more clients with which the company can discuss defined contribution plans.

Leonard says that, after the transaction, Gallagher’s overall DC business will move from constituting about 80% of the firm’s business to a 50-50 split with its DB offerings. Furthermore, Buck will bring a pension client base in the U.K., where Gallagher does not currently have a presence.

The Full Suite

Overall, the Buck acquisition is another step in meeting a need Gallagher is hearing from clients (including human resource leaders) to help employees maximize their benefits across finance and health, Leonard says. That need will come in part from incorporating Buck’s bSuite—a platform for benefits administration and employee engagement—with Gallagher’s own personalized wealth solutions program, Gallagher Money Coaching.

“That’s a really nice opportunity for us to respond to the employers’ request to help their employees from a financial education perspective,” Leonard says.

Gallagher’s strategy is following a relatively recent trend of positioning services not just for the plan sponsor, but for their participants also, according to Leonard.

“Where we are today is much different than where we were 10 years ago,” he says. “I think in the past, financial planning and one-on-one coaching … was really expensive per employee. Now, with the technology, it’s becoming more price-accessible for employees, and that’s why it’s becoming more available.”

Leonard’s relationship with Buck goes beyond this recent deal. He worked at the firm from 2005 to 2013, including focusing on client retention and attraction in its retirement business. Now, Leonard says a key to keeping a client long-term is by offering them the full range of financial services.

“It is just a good opportunity for the longevity of the client,” Leonard says. “The more you know about the employer and what the employer is providing, the better adviser you can be. … We’re more efficient if we’re under the tent for everything, so to speak, because our people have access to the information.”

The Buck transaction will bring 2,300 new employees to Gallagher, which as of December 31, 2021, had 39,000 employees. The deal is expected to close during the first half of 2023, subject to customary regulatory approvals.

Going forward, Leonard sees the firm considering the acquisitions of small, local retirement and wealth advisories around the U.S. He says having the wealth platform of f3 Companies and the broader footprint of Buck will make those types of acquisitions more possible.

“I see us now being able to go around and build across the country on the retirement and wealth side,” Leonard says.

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