Adviser Confidence Rising, yet Market Worries Remain

The Advisor Confidence Index (ACI), a benchmark that gauges adviser views on the U.S. economy and stock market, ended the year on a slight decline from November to December.  

Conducted on an ongoing basis by Rydex|SGI AdvisorBenchmarking , the index stood at 99.31 when calculated this month; in November, the index closed at 100.33.

The slight decrease from last month may stem from worries over the European economy. “Even if policy decisions were excellent in the U.S. in 2012–and they will be far from that–[the U.S.] will not be immune to problems in Europe,” said Richard Coe, CFP and financial adviser with Coe Financial Services. “Those problems are so complex that they could easily go from bad to much worse,” he said.

Among the economic components of the ACI, advisers’ 12-month outlook increased 1.46 % to 104.17 from 102.67. The stock market component of the ACI fell 5.18% to 98.61. The current economic outlook        fell 2.97% – but advisers were much more pessimistic in 2010 (see “Adviser Confidence in Economy Declines”).

Advisers were asked additional questions this month about the 2012 outlook. When asked what their main concern was for the year ahead, 50% of respondents stated market conditions, followed by 13% concerned about retaining clients. As stock market performance for 2012 is difficult to predict, 37% of advisers surveyed don’t yet have an opinion on what 2012 will bring, while 25% of respondents believe the stock market will perform worse than in 2011.

 “We are now directly correlated with the events of Europe while Europe tips towards recession and the U.S. slowly climbs out with slow modest growth amid signs of economic improvement. Someday the hostage will be released which should provide upside to U.S. and international markets,” said Kenny Landgraf, Kenjol Capital Management.

Modeled after the Conference Board Consumer Confidence Index, the ACI captures the sentiments of 150 independent registered investment advisers (RIAs). The index's analysis is based on the number of completed surveys and reflects only information from those surveys.

Rydex|SGI AdvisorBenchmarking is a research and analysis center focused on the RIA marketplace. Every year through its survey website, , the firm conducts multiple surveys of advisers, covering a host of business management and investment management practices.