Clients are feeling good, but advisors are staying calm. Buoyed by a big jump in clients’ risk appetite, the Retirement Advisor Confidence Index — Financial Planning’s monthly barometer of business conditions for wealth managers — climbed 2.3 points in December, reaching a five-month high of 54.
One key factor: a 14-point jump in perceived client risk tolerance, bringing that component back into positive territory. (RACI readings of less than 50 indicate declines, while readings of more than 50 indicate expansion.)
But while clients were feeling frisky, advisors kept their heads. Asked to focus on November activity, advisors reported only minor shifts in allocations to bonds and equities from the previous month.
“I try to help clients avoid the emotions tied to good or bad performing periods in the market and focus them on building their nest egg over the long run,” one planner noted.
The index also appears to have benefited from a sharp increase in retirement planning fees, with respondents citing both a year-end focus on retirement plan contributions and increasing interest from small-business owner clients.
“We usually see a higher inflow into retirement plans starting in November and continuing until April of the following year,” one respondent explained.
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.
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