The Markets September 15, 2011

Advisers Lack Consensus on Investment Outlook

The percentage of advisers who think the economy is headed for a “double-dip” recession in the next six months—although still more than half—has decreased from one year ago.  
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Charles Schwab’s tenth semi-annual Independent Advisor Outlook Study reveals that more than half of 900+ advisers surveyed (52%) say a “double-dip” recession in the next six months is unlikely, down from 59% one year ago.The survey also reveals a sharply divided investment outlook, with “bulls” outnumbering “bears” 37% to 22%, and 41% calling themselves neither.   

The study provides registered investment advisers’ (RIAs) perspectives on economic, investment, and client outlook for the next six months. The results also reflect a more conservative client outlook and investment choices that reflect the mixed point of view.

Some highlights from the study include:

  • S&P 500 – Nearly three-fifths (58%) of advisers surveyed expect the S&P 500 to rise in the next six months, down from the up from 77% in the previous survey in January, but more akin to one year ago.   
  • Inflation at bay? – Only 58% of advisers think inflation will increase in the next six months, compared to only 42% last July.
  • Unemployment uptick – 39% of advisers surveyed believe it will increase, compared to 17% in January 2011
  • Client reassurance – The number of clients needing reassurance about meeting their investment goals (23%) remains unchanged from January.
  • Large-caps stocks, more cash and bonds  – 32% of advisers are likely to invest more in domestic large caps, 21% invest more in emerging market large caps, and 17% more in large cap developed markets, all modest decreases from January. Reflecting a conservative turn, 15% of advisers intend to hold more cash and 12% expect to invest more in bonds.
  • Clients are turning more conservative – Advisers report that 41% of their clients are reducing expenses (up from 34% in January), while only 8% are spending money on discretionary items (compared to 22% in January).
  • Retirement portfolios holding steady – Advisers report that almost half of their clients (46%) are neither adding to nor taking withdrawals from their portfolios.  Just one in five are adding new money.

The number of participating RIAs represent over $207 billion in total assets under management. The survey was conducted between July 26 and August 5, 2011.  For the previous survey’s results, see “RIA Optimism Rising Sharply“.

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