As market conditions have improved, advisors say their clients are increasingly willing to take on risk.

These shifts helped raise this month’s Retirement Advisor Confidence Index — Financial Planning’s monthly barometer of business conditions for wealth managers — 5.3 points to 54.5, and back into positive territory following two months of record lows.

Last month, advisor perceptions of their clients risk tolerance rose more than 10 points, to 46.8. Advisors reported that this led their clients to shift assets into equities and away from cash. Client assets allocated to equities rose 11.4 points, to 63.2, while assets allocated to cash fell 11.2 points.

One advisor wrote: “The U.S. equities market in October was very soothing to many of my clients, especially since October has been quite volatile in past years. My clients embraced the relative calm in the market.”


Other advisors reported that their clients showed greater interest in retirement plans. “I see smaller companies inquiring about retirement plans, which indicates to me that perhaps the economy is more stable,” said one advisor. “I also see more individual clients contributing to their IRAs again.”

Some advisors also reported that the market upswing was giving them a chance to collect more fees. One noted that, while the market downturn meant fewer fees, “a good amount of [the] previous months’ losses were made back” in October.

However, many advisors expressed concern about how the pending Department of Labor fiduciary rule could affect their businesses. The rule “would limit the amount of business and the capacity in which my team works with our clients,” said one advisor. “If they get their way, the likelihood of us staying in the [defined contribution plan] space will be very small.”


Another advisor agreed: “Continued regulatory uncertainty has led a number of clients who are business owners to hold back on expanding or offering corporate retirement plans.”

The Retirement Advisor Confidence 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. RACI readings below 50 indicate deteriorating business conditions, while readings over 50 indicate improvements.

Maddy Perkins

Maddy Perkins

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