Advisors say that clients’ confidence is continuing to decline and that their appetite for risk has reached record lows.

As a result, this month’s Retirement Advisor Confidence Index — Financial Planning’s monthly barometer of business conditions for wealth managers — has edged further into negative territory, falling 1.5 points to 47.1.

Meanwhile, the index’s risk tolerance barometer dropped almost 7 points, to 27.9, the lowest recorded score since the index’s inception. “Obviously, the economic outlook and volatility have affected our clients’ perceived risk tolerance level,” one advisor says.

Nevertheless, advisors noted their clients’ allocations to equities stayed relatively flat, falling just 0.1 percent, to 48.3.


But advisors reported that clients were pulling away from contributing to retirement plans. As one advisor wrote: “Clients losing money in the markets generated lower fees and they were not as ready to participate in retirement plans — noticed a cutting back.” The index’s retirement contribution benchmark recorded a drop of more than 4 points.

Many advisors felt their clients were being too skittish. In addition, several pointed out their clients were not thinking about the long term. As one advisor remarked: “People are concerned; the news noise can cause worry. The past several weeks have required a lot of hand holding — i.e., remembering their investment goals and the implementation of solutions and strategies to help them achieve their goals.”

Several advisors commented on the fiduciary rule that’s likely set to become law. Many said their firms have been increasingly cautious when helping clients with retirement planning.

One advisor wrote: “[Our firm is] spending a lot of time trying to figure out how to handle changes coming from the DoL.”

Another advisor says he expected the rule would cause many advisors in the industry to raise their portfolio minimums. “Risk/reward is making the little guy just not worth it,” he says.

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.