Client appetite for risk slipping

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With the boost from the end of tax season dwindling, advisers were not too spooked by slower retirement business, despite reporting a significant dip in contributions.

The end of tax season brought this month’s Retirement Adviser Confidence Index — Financial Planning’s monthly barometer of business conditions for wealth managers — down 2.4 points to 52.6, still remaining in positive territory.

Total contributions to retirement plans fell 9.5 points to 57.7. Fees charged for retirement services fell as well, dropping 4.6 points to 53.0.

And while the index was mostly down across the board, many advisers attributed the drop in activity to an already anticipated annual seasonal slowdown.

Tax season “is busier than normal for establishing new plans,” one adviser said. “Net of this, activity was relatively unchanged.”


Still, some advisers did notice a decline in their clients’ appetite for risk. Perceived risk tolerance level fell 5.1 points to 51.3. Some advisers witnessed increased skittishness among their clients.

“Clients seemed less optimistic,” wrote one adviser. Another surveyed adviser noted that “uncertainty and volatility are the major drivers, along with concerns about the national debt and the effect the rising Fed rate will have on it.”

Yet some advisers also noted that their clients remained active.  One adviser said, “The increase in the market made people feel better about moving their accounts and/or contributing to the market.”

Some advisers did express concern about the implementation of the Department of Labor’s new fiduciary rule. “The biggest condition that will be affecting us going forward will be the implementation of the new DoL regulations, although we are still processing all of that, and how we will adapt is still undetermined,” wrote one adviser.

Uncertainty regarding the rule left some advisers feeling stagnant: “The issue continues to make it difficult to look at offering [retirement] services to additional clients. We are just maintaining our existing relationships,” one adviser remarked.

The Retirement Adviser 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.   

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