Divergence between surveys of outlooks on financial markets points to continued uncertainty
With the world still in a state of sentiment limbo amid the ongoing global COVID-19 crisis, advisors appear to be caught between bullishness and bearishness.
That’s the conclusion that might be drawn from a pair of surveys conducted south of the border, both of which focused on registered investment advisors (RIAs).
In the latest wave of its Independent Advisor Tracking study, E*TRADE Advisor Services found over half of participants (52%) held a bearish market outlook for the next quarter of 2020, representing a six-percentage-point uptick since March.
The poll also found a cautious attitude with respect to politics, with 56% of advisors – a 24-percentage-point surge from March – saying they actively managing risks associated with political instability on behalf of clients. That matched the percentage of advisors who reported concerns about an oncoming recession.
But by far the biggest concern involved market volatility, cited by 81% of the RIAs polled. That could be feeding into investors’ fear- or greed-driven tendency to time the markets, which emerged as the top mistake made by clients as cited by 51% of advisors.
Meanwhile, another survey of RIAs conducted by TD Ameritrade Institutional found 63% of participants were optimistic about the prospects for U.S. and global economy in 2021. That contrasts with their nearer-term outlook, with just 24% of respondents being bullish about the economy for the remainder of 2020.
Participants’ attitudes on the stock markets showed a similar pattern. While just 25% believed that U.S. stocks would increase by year-end 2020, 62% shared a bullish stock-market outlook for 2021. When asked what factors they expect to impact portfolios, seven tenths of respondents said they were watching the U.S. economy (73% of RIAs), the U.S. presidential elections (70%), and corporate earnings (70%).
Whether they lean toward an attitude of cautiousness or confidence, job one for advisors was to ensure their clients can recover and are properly supported through ongoing financial challenges. In the E*TRADE Advisor Services study, 41% of respondents said their client portfolios have fully recovered since the downturn.
Meanwhile, 33% of RIAs in the TD Ameritrade Institutional survey said they have upgraded their technology to facilitate team and client engagement; 68% said they are communicating with clients more frequently, and 88% report the quality of their interactions were at least as good as they were pre-pandemic.
