Leading up to a highly contested presidential election, financial advisers' confidence in the economy improved slightly during the month, although stock market sentiment, while still elevated, eased slightly.
According to the last September reading from Wealthmanagement.com's The monthly index of advisers' sentiment, confidence in the economy rose three points to 103, climbing slightly into positive territory from last month's overall neutral reading of 100.
Digging deeper, one in three financial advisors consider the current state of the economy to be “good” or “excellent,” while 21% consider the economy to be “poor” or “terrible.”
Looking six months ahead, advisers are almost evenly split on whether they see the economy improving (33%), staying the same (32%) or getting worse (37%).
This picture improved when advisers were asked to look out for the next twelve months. 53% of advisers believe the economy will improve, with only 28% suggesting a decline.
Most advisers are looking to get through the next election before making more definitive statements about the direction of the economy. Inflation is still considered a major issue among councilors surveyed, with some suggesting official readings are understating the case.
However, many advisers also cited the Federal Reserve's delayed rate cuts as a negative impact on economic growth, leading to challenges and a possible recession.
Advisors so far this year have consistently taken a more favorable view of the stock market than the economy. Two-thirds of advisors consider the state of the stock market to be healthy.
Like their views on the economy, they are evenly divided when predicting the health of the stock market six months out. A third of respondents see the market improving, while an equal number see no change and another third predict somewhat worse.
Many said they were cautious about high valuations, fueled by predictions of short-term volatility. The sentiment becomes clearer with a longer horizon – here, 57% of advisors see a net improvement in the market, while only 22% see a decline.
For the Advisor Sentiment Index, registered investment advisors are asked to rate their current view of the economy and markets, as well as their sense of the future direction of each relative today, on a five-point scale ranging from much better in many. worse, compared to today. Scores are weighted and plotted on a range from 0 (extremely negative feeling) to 200 (extremely positive feeling), where 100 reflects an overall neutral rating.
Methodology, data collection and analysis by WealthManagement.com and Informa Engage. The methodology conforms to accepted marketing research methods, practices and procedures. Starting in January 2024, WealthManagement.com began promoting a short monthly survey to active users. Data will be collected within the last ten days of each following month, with a target of at least 100 financial advisor respondents per month. Respondents were asked about their views on the economy and the stock market as of now, six months from now and one year from now. The responses are weighted and used to create an index tied to a neutral value of 100. Over time, the ASI will provide a sense of the direction of retail financial advisors.