Market optimism growing among financial advisors; even as volatility concerns remain elevated

More than two-thirds (70%) of registered investment advisors (RIAs) believe the S&P 500 will increase by 3% or more in the next 12 months, according to the inaugral edition of the RIA Economic Outlook Index. Released today by Security Benefit in partnership with Greenwald Research and DPL Financial Partners, this quarterly index gauges RIA sentiment on econmic conditions from a range of 0 (extremely pessimistic) to 100 (extremely optimistic), setting a benchmark score of 58 in its first edition.

“The Index launches with a baseline of guarded optimism that’s intriguing in its own right, coming at what many view as a pivotal inflection point for the economy,” said Mike Reidy, National Sales Manager, RIA Channel at Security Benefit. “What will be really interesting, though, is to watch how it changes over time, since advisors are both astute observers of the financial market and important influencers on their clients’ investments and financial futures.”

What RIAs anticipate for the stock market in 2024

While the overall sentiment towards economic conditions is positive, a strong majority of respondents (88%) believe stock market volatility will be at least as strong as it is now over the next 12 months. Forty-two percent expect it to be higher.

“We see a more positive outlook from RIAs as the Fed continues to keep rates higher for longer to curb sticky inflation,” added Reidy. “And as RIAs across the industry foresee stock market volatility persisting, this may influence how they think about protecting assets for their clients who are nearing and currently in retirement.”

RIAs Have Mixed Views on Risks Ahead

Federal Reserve policymakers believe inflation will continue to ease, with their closely watched dot-plot indicating three rate cuts in 2024. Many RIAs mainly agree. Fifty-six percent believe the rate of inflation will only grow between 2-2.9% over the next 12 months. But some remain skeptical, with 4 out of 10 RIAs (39%) believing inflation will stay above 3% a year from now.

As market worries surrounding inflation have somewhat faded over the past year, just over half (58%) of RIAs believe there is almost no or low likelihood there will be a recession in the next twelve months. Thirty percent see a moderate likelihood of recession in the next year, with 12% signaling a “high” or “almost certain” change of a major downturn.

On the other hand, over half of RIAs (58%) surveyed are at least somewhat concerned about the risk of a major equity market downturn during the course of 2024. That could contribute to continued advisor interest in investment products that offer upside potential with downside protection.

“Because there is significant worry about the potential for a market downturn, we’re seeing increased adoption of FIAs, fixed annuities, and other protection-based products,” said David Lau, founder & CEO at DPL Financial Partners. “We believe it’s the combination of market sentiment and the availablilty of fee-based protection products driving usage among RIAs who have historically lacked access to these solutions.”

The survey of 201 U.S. RIAs was conducted by Greenwald Research.

“Our goal with this new index is to accurately capture and track on a quarterly basis how advisors are thinking about the market and the overall economy throughout the year,” said Matt Greenwald from Greenwald Research. “By posing questions about the equity market, inflation, recession risk, amongst others, we’re working to capture the current sentiment at a more micro level to help advisors and their clients with their financial planning.”

Methodology

The survey was conducted by research and consulting company Greenwald Research among a national sample of 201 registered investment advisors from February 2024. To produce the Index, the answers to each question on the economy/market were scored from 0 for the most pessimistic to 100 for the most optimistic. Each respondent’s total score represents the sum of their responses to the five questions, divided by five. RIAs were the primary focus given their pulse on the market and representation of a wide breadth of clients.

About Security Benefit

Security Benefit Life Holdings (“Security Benefit”), through its subsidiary Security Benefit Life Insurance Company (SBLIC), a Kansas-domiciled insurance company that has been in business for more than 132 years, is a leader in the U.S. retirement market. Security Benefit together with its affiliates offers products in a full range of retirement markets and wealth segments for employers and individuals and held $51.6 billion in assets under management as of December 31, 2023. Security Benefit, an Eldridge business, continues its mission of helping Americans To and Through Retirement^®. Learn more at www.securitybenefit.com and follow us on LinkedIn, Facebook, or X (formerly Twitter).

About Greenwald Research

Greenwald Research is a leading independent research and consulting partner to the health and wealth industries that applies quantitative and qualitative research methods to produce insights that help companies stay competitive and navigate industry change. Leveraging deep subject matter expertise and a trusted consultative approach since 1985, Greenwald offers comprehensive services to answer strategic business questions.

About DPL Financial Partners

DPL Financial Partners is the leading insurance marketplace bringing best-in-class solutions from the nation's top carriers to registered investment advisors (RIAs), their clients and consumers. DPL's products, proprietary tools and embedded technology enable RIAs to incorporate insurance and annuities into their practices to more holistically serve their clients. Clients benefit from products that offer competitive pricing and transparent, fiduciary implementation to meet a range of needs in the financial plan. www.dplfp.com

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