After growing more bullish for months, retirement advisors lost some of their economic confidence this month as politics spoiled the party.
That's according to the latest data from Arizent's
"I expect the elections in the U.S. and around the world to increase short-term volatility," one advisor said.
It's not that wealth managers have soured on the economy altogether. In their survey answers, many said they were encouraged by the improving stock market and the prospect of lower interest rates later this year.
It's just that, as one planner put it, "It's hard to advise in an election year." Numerous advisors complained that as the U.S. presidential election approaches, they see instability and "ugliness" ahead.
"Many of my clients are concerned about what business outlook and financial ramifications will result from the upcoming presidential election and are trying to hedge their portfolios in advance," one advisor said.
This political pessimism was clear from the data. Faith in government policy fell to a score of seven in March, down from 16 in February. And confidence in the global economic system slid downward from minus-48 to minus-52.
And it's not just domestic politics that has advisors worried. The violence in Israel and Ukraine caused uneasiness as well.
"The ongoing international wars may cause food and energy price inflationary pressure if the distribution channels are affected," one planner said.
This geopolitical anxiety carried over to advisors' own practices. Client risk tolerance, which had been rising from October to February, sank from 14 last month to nine in March. And practice performance, which rose to 42 last month — its highest point in RACO's 10-month history — fell to 37 this month.
"It seems like the stock market is due for a pullback, and so we are becoming more conservative," one wealth manager said.
There were, however, some bright spots in the data. Planners gave the "overall economy" a score of 30, down only two points from February's score of 32 — another high point for the survey.
Given the stock market's recent performance, this is not surprising. The S&P 500, Nasdaq and Dow Jones have all been steadily rising since the end of October. In February alone, the Nasdaq
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"The 'rising tide lifting all boats' has been nice for most investment strategies over the past year, and clients are happy," one advisor said.
And while many advisors complained about Congress and the White House, they looked forward to the Fed's next move with cautious optimism. The central bank has said it expects to
"Lower rates should drive the stock market higher," one planner said. "We're locking in rates now."
The combined effect on retirement advisors was complicated: While many dreaded the upcoming presidential election and its potentially destabilizing effects, just as many felt they could handle it.
"It's going to be a wild year," one said, "but my clients will have more money when it's over."
