Competitive pressures, wobbly equities markets, China unrest and even Ebola fears have shaken planners’ confidence.

After a modest rebound in September, the Retirement Advisor Confidence Index — Financial Planning’s monthly barometer of business conditions for wealth managers — fell 3.3 points to 49.9 in October, its lowest level since December 2012. It was only the third time that the overall index score has fallen below the 50 mark. (RACI readings of less than 50 indicate declines, while readings of more than 50 indicate expansion.)

Advisors reported double-digit shifts in cash allocations (up) and perceived risk tolerance (down 15 points).
While advisors were asked to focus on September activity, the survey was fielded during mid-October’s pronounced market volatility, which may have colored advisor responses. One planner said: “September to August, clients’ risk tolerances remained the same, but in October, we’ve had a couple [of] calls. With so little downside volatility, this small correction has affected people more so than it might otherwise have.”
Meanwhile, the index’s fee-related component fell 5.2 points, although some planners noted higher fees based on higher asset values in September.

Several respondents said that their fees were under pressure both from online competition and because of a push for transparency in retirement plan management. “Free offerings are making it even more difficult to communicate the value of a management fee based on AUM,” one advisor said.

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.