Optimism rises post-election
As the dust from the presidential election settled, advisers reported a significant increase in their clients’ appetite for risk.
Increased optimism about the regulatory landscape and economy boosted this month’s Retirement Adviser Confidence Index — Financial Planning’s monthly barometer of business conditions for wealth managers — 7.6 points and back into positive territory at 55.5. The index has reached its highest point in a year.
Client risk tolerance rose 19.8 points to 56 from 36.2, easing comfortably back into positive territory. Many advisers reported the leap in client confidence was the result of the election outcome.
“[We saw] slightly more contributions, as most clients seem happy with the election results and are generally more confident,” wrote one adviser.
Another adviser said, “With the November elections behind us, my clients’ outlook is more positive, and [they are more] willing to invest money back into the market and retirement plans.”
Total contributions to retirement plans rose 4.6 points to 60.4. Total number of retirement products sold to clients rose 5.5 points to 56.5.
Some advisers had mixed feelings about a Trump presidency. “Trump winning is a sigh of relief on regulation, but protectionism and foreign policy are a concern,” one adviser said.
There were multiple opinions regarding the future of the Department of Labor’s fiduciary rule following the election results. Some advisers wondered if the administration of President-elect Trump would change the path of the rule: “The rule will have major negative impact on our retirement business outlook,” one adviser said. “Not sure now if [the] Trump administration will delay it.”
Others are waiting with bated breath. An adviser weighed in: “The Trump victory helped, but advisers are still scrambling with the ambiguity about the fiduciary rule.”
However, some advisers expressed support for the rule and its principles: “We believe the DoL fiduciary rule will continue to highlight their importance to clients and contribute to the migration of assets [toward] RIAs,” one adviser wrote.
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.