Running Against the Bulls: RIAs’ Economic Concerns Increase for Next 12 Months

Are bears closing in on the economy? Registered investment advisers remained more bullish than retail investors in a recent market outlook study by Schwab Asset Management, but there was a noticeable increase from last year in bearish RIAs and investors.

A slim majority of RIAs reported they were “somewhat bullish” on the economy and financial markets for the next 12 months. Bearish advisers, meanwhile, increased to 46% from 26% last year. Similarly, although less dramatically, the survey found bearish or unsure investors increased to 61% from 52% last year.

A majority of responding advisers and investors told Schwab they viewed tariffs and geopolitical tensions as the two greatest risks to the market for the next 12 months. As for investment strategy, 31% of responding advisers viewed market volatility as a buying opportunity, compared with only 17% of investors.

Asked about long-term investment approach, 80% of responding RIAs said they would maintain their clients’ strategic asset allocations in the second half of the year, compared with 65% taking that approach in the first half of 2025. Only 51% of investors reported they would maintain their strategic asset allocations in the second quarter of 2025.

For most fixed-income assets and equities, a larger percentage of advisers than investors reported they preferred active management. Only with U.S. large-cap and mid-cap equities did investors report a greater preference than advisers for active management.

Participating RIAs were asked to list their clientele’s top three behavioral biases. Recency bias—being swayed by recent news events—was the most common response, displayed by 70% of clients. Confirmation bias—seeking information that proves one’s existing beliefs—was seen in 53% of clients, up from 36% last year.

Behavioral biases were reinforced by responses to a question about what factors can lead to a change in portfolio or asset allocation. Advisers said cash flow and/or liquidity needs are the top factor driving portfolio changes, cited by 57% of advisers, but only by 20% of retail investors. Contrarily, 32% of retail investors said market volatility drives change to asset allocation; this was the top factor for retail investors.

Omar Aguilar, Schwab Asset Management’s CEO and CIO, said during a Monday call that investors need to remain disciplined. He said he expects volatility to increase in the next six months, and he said investors would benefit from avoiding market timing and keeping their portfolios diversified.

“You don’t necessarily have to swing for the fences,” Aguilar said. “While it is a good strategy to try to go active, you don’t necessarily have to take managers that have huge tracking error if your objective is to try to generate consistent income.”

Schwab received survey responses from 67 advisers and 438 retail investors in June.