Adviser Confidence Falls to Lowest Point in Rydex Index History

In October, adviser confidence in the economy and stock market sank for the second month in a row, according to a release from Rydex AdvisorBenchmarking, which produces the Advisor Confidence Index (ACI)—a benchmark that gauges adviser views on the U.S. economy and stock market. The index was 79.07 in October, down 14% from 92.22 in September.

Rydex surveyed registered investment advisers (RIAs), and found they are stepping up their communication and reassurance efforts, and, yes, “staying the course,’ with investment strategies (see “Guiding Participants through Ups and Downs’).

More than half of financial advisers surveyed took preventative measures, moving their clients’ money to cash prior to the financial crisis, according to the release. Also, 12% of advisers increased their allocation to alternative investments in the past few weeks, and 37% of advisers employed alternative investments prior to the financial crisis in order to help their clients better handle the volatile market. Twenty-two percent of advisers are planning to increase allocations to alternatives in the near future (see “The Alternative Route“).

However, overall movement within clients’ portfolios has been relatively low, according to the survey (see “CFP Clients Stick to Strategy’). Most advisers say they are maintaining the current allocations of their clients’ portfolios. In the near future, 51% of advisers surveyed are planning to maintain current asset allocations.

To help clam their clients, advisers surveyed said they have discussed the current market drop with their clients and have been proactively calling (83%) and sending e-mails to their clients (66%) (see “How to Manage Affluent Investors in Financial Crisis“). Almost half (44%) of advisers surveyed have been proactively meeting with clients, and almost half of the advisers were also actively reaching out to their clients before the financial crisis, according to the release.

Despite falling confidence, most financial advisers are positive about the government’s Wall Street rescue plan, with 70% of advisers supporting the financial bailout (see “Advisers Think Bailout Will Work, Survey Says“). However, almost half (43%) of advisers surveyed did not support the Security and Exchange Commission’s actions regarding short-selling and its overall role in the crisis (see “SEC Bans Shorts of 799 Financial Stocks“).