Clients remain hesitant, and advisors are treading water, but an increase in client participation in employer retirement plans and a shift away from cash allocations brought a slight boost to advisors’ spirits.

Those are among the main takeaways from February’s Retirement Advisor Confidence Index — Financial Planning’s monthly barometer of business conditions for wealth managers. The index edged up 1.1 points for the month to 53.3 after lower client risk tolerance brought the index down from a five-month high last month.
Asked to focus on January activity, advisors said the global economy continues to worry clients, whose appetite for risk stayed essentially flat after falling the previous month.

Another challenge for advisors: a decrease in fees charged for retirement services. One advisor said they were “attempting to keep fees as low as possible so as to benefit clients’ returns — particularly in these volatile markets.”

Yet other factors helped lift the overall index. Clients stopped their shift away from equities and toward cash.
Advisors also reported a jump in employer retirement plan participation, suggesting a healthier economy. “We had some new employees added to some employers we work with,” one advisor said. “We also had a few employees who wished to increase their contributions.”

The index is composed of 10 factors — including asset allocations, investment product recommendations, economic and risk factors, taxes and planning fees — to track trends in wealth management business cycles. RACI readings of less than 50 indicate declines, while readings of more than 50 indicate expansion.

Maddy Perkins

Maddy Perkins

Maddy Perkins is the Assistant Managing Editor for Financial Planning, Bank Investment Consultant and On Wall Street.