Advisor concerns for a major equity market downturn largely wavered in the final quarter of 2024

Registered Investment Advisors (RIAs) have an improved outlook and increased optimism following the U.S. election, according to the latest RIA Economic Outlook Index from Security Benefit in partnership with Greenwald Research. The index found that the RIA sentiment surrounding economic conditions from a range of 0 (extremely pessimistic) to 100 (extremely optimistic) rose to 56 after falling to 53 in the third quarter of 2024. Though outlooks have improved among advisors the index is still lower than Q1 of 2024 when advisors set a score of 58.

“Optimism around the direction of the markets in 2025 is tempered by the belief that progress on inflation will be muted,” said Mike Reidy, National Sales Manager, RIA Channel at Security Benefit. “Nearly half still see at least a moderate likelihood of a recession and just over half see continued market volatility throughout the year. With all this in mind, it is important that clients and advisors prepare their portfolios for all scenarios with protection-based products.”

Inflation Concerns Remain a Central Issue

Matching the sentiment of December’s economic projections from the Federal Reserve, inflation concerns have ticked up among RIAs, as two in five (40%) now believe inflation will be at least 3% in the next twelve months — a 7% uptick since Q1 2024. While the overall sentiment has improved slightly for RIAs, almost half (48%) of advisors still believe there is a moderate or high likelihood of a recession within the year.

Confidence in the Market’s Performance Continues

Nearly one-third (32%) of RIAs surveyed cited that they were not at all or not too concerned regarding a major equity downturn in the next 12 months. Additionally, 20% of RIAs surveyed believe that the S&P 500 is likely to see 10%+ gains in the next 12 months.

As for the stock market, over half (54%) of RIAs continue to estimate stock market volatility in the next twelve months will be higher than in 2023. However, only one in six is at least very concerned about the risk of a major equity market downturn in the next 12 months.

And now that the election is over, RIAs are maintaining their allocations with 72% noting that they are not making any changes in their investment strategies due to the results of the election. Interestingly, a quarter of RIAs plan to become more aggressive with client allocations.

RIAs believe the TCJA will be renewed in 2025

Seventy-five percent of RIAs report that clients ask about the expiration of the Tax Cuts and Jobs Act (TCJA). Though RIAs are split on continued market volatility they do agree on TCJA’s future, as eight out of ten RIAs believe TCJA renewal is likely to occur before the end of 2025. However, should it not be renewed this year, three out of four advisors believe it would slow the economy, though almost half (47%) do not believe it would impact interest rates.

In response to potential nonrenewal, 65% of RIAs stated they would increase the use of tax-preferred investments to help protect client assets.

Methodology

In November 2024, Greenwald Research surveyed 100 registered investment advisors from across the United States, each managing significant assets and directly interacting with clients. The online questionnaire collected crucial data on RIAs’ business practices, economic outlook, financial product usage, and client demographics. This method blended quantitative and qualitative insights, capturing key trends within the financial advisory industry.

About Security Benefit

Security Benefit Life Holdings, Inc. (“Security Benefit”), through its subsidiary Security Benefit Life Insurance Company (SBLIC), a Kansas-domiciled insurance company that has been in business for nearly 133 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 $53.5 billion in assets under management as of September 30, 2024. Security Benefit, an Eldridge Industries 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.

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