A growing number of registered investment advisors (RIAs) expect to see higher market volatility over the next 12 months, finds new research by insurance company Security Benefit.
According to the Second Quarter Economic Outlook Index, released in partnership with Greenwald Research and DPL Financial Partners, four in 10 advisors surveyed said they are extremely or very concerned about inflation and international conflicts impacting investments. Nearly half (47%) of advisors anticipate inflation will be in the 2% to 2.9% range over the second half of the year, compared to 57% of advisors in the previous quarter.
Such volatility could stem from the upcoming U.S. presidential election in November, say experts. The Security Benefit findings show that clients are worrying about how the election will sway their investments—80% of advisors in the survey say their clients have reported concerns about the political climate over the next 12 months. Another 32% of advisors believe the political state of the U.S. will have a negative effect on their investments, while 15% expect it to have a positive impact.
“We’re at a pivotal time with the economy,” said Mike Reidy, national sales manager of the RIA Channel at Security Benefit. “With the 2024 U.S. presidential election ahead, many RIAs are not concerned about a major equity market downturn over the next 12 months. However, they do anticipate that the market will experience a higher level of volatility than experienced in 2023.” With volatility comes uncertainty. “We will likely see rates remain the same over the next few months, with a potential decrease late in the year, though conditions like geopolitical developments and other political uncertainty are worrying advisors and their clients.”
Concern has intensified as the election draws closer, pushing some clients to seek financial advice in order to protect investments, studies find. Research from the CFP Professionals Financial Outlook survey showed that 83% of CFPs believe the upcoming election cycle will have at least some sort of impact on investors’ finances.
To appease client concerns, financial advisors are recommending downside protection products and guaranteed lifetime income solutions in the coming months. Security Benefits findings reveal that 80% of RIAs believe such protection is “highly” valued by clients, while 50% say it could positively impact client portfolios. However, nearly half agree that a client’s age is important in measuring the appropriate level of protection, while 46% deem investment allocation as a significant factor when implementing the product.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
