More registered investment advisors (RIAs) expect market volatility to stay strong, or even pick up, in the next 12 months, shows recent findings by insurance company Security Benefit.
The report, “RIA Economic Outlook Index,” and in partnership with Greenwald Research and DPL Financial Partners, finds that 88% of respondents believe stock market volatility will “be at least as strong as it is” now over the following year, and close to half (42%) expect it to be higher.
The quarterly index gauges RIA sentiment on economic conditions from a range of 0 (extremely pessimistic) to 100 (extremely optimistic), setting a benchmark score of 58 in its first edition.
Security Benefit reports that policymakers and RIAs alike anticipate inflation to ease, as 56% of advisors believe the rate of inflation will only grow between 2% to 2.9% within the coming months. Yet, four in 10 RIAs (39%) say inflation will stay above 3% a year from now.
Recession worries have greatly decreased, the report shows, as 58% of RIAs believe there is an almost zero to a low likelihood of a market downturn within the next 12 months. Thirty percent expect a moderate likelihood of recession in the next year, and 12% say there is a “high” or “almost certain” change of a major downturn.
While Security Benefit believes the overall market outlook amongst RIAs to be positive, experts forecast an uptick in interest with protected income. “We see a more positive outlook from RIAs as the Fed continues to keep rates higher for longer to curb sticky inflation,” said Mike Reidy, national sales manager of the RIA Channel at Security Benefit. “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.”
This is especially true as 58% of RIAs in the survey report concerns over the risk of a major equity market downturn in 2024.
“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,” continued David Lau, founder & CEO at DPL Financial Partners. “We believe it’s the combination of market sentiment and the availability of fee-based protection products driving usage among RIAs who have historically lacked access to these solutions.”
SEE ALSO:
- Savers Concerned About Inflation; Few Taking Action to Combat It
- Inflation and Unemployment Decline While Account Balances Grow: Vanguard
- As High Inflation Enters Third Year, Americans Rethink Retirement
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.