Advisor Confidence Index Fell in December on Europe Woes

Problems in Europe and continued market volatility led to a lower index in December

The Advisor Confidence Index, compiled by Rydex|SGI Advisor Benchmarking, fell slightly in December 2011 to close at 99.31, down from 100.33 in November.

The drop may be attributed to concern of Europe’s economic worries. "Even if policy decisions were excellent in the U.S. in 2012--and they will be far from that--[the U.S.] will not be immune to problems in Europe," Richard Coe, CFP and financial advisor with Coe Financial Services, said in a statement. "Those problems are so complex that they could easily go from bad to much worse," he said.

Also in December, The Conference Board's Consumer Confidence Index, which rose somewhat in November over October, increased further in December. The CCI now stands at 64.5, up from 55.2 in November.

Kenny Landgraf, president and CEO of Austin, Texas-based Kenjol Capital Management, agreed that the United States could not escape events in Europe. “We are now directly correlated with the events of Europe while Europe tips towards recession and the U.S. slowly climbs out with slow modest growth amid signs of economic improvement,” Landgraf said in a statement. “Someday the hostage will be released which should provide upside to U.S. and international markets."

While advisors’ current economic outlook fell almost 3% from November, their outlook in the near future improved. The six-month economic outlook is up 2.74%, and the 12-month economic outlook is up 1.46%. The stock market component of the index fell over 5% to 98.61, however.

Despite the drop in the stock market outlook, 37% of advisors said they “don’t yet have an opinion” on stock market performance in 2012. One quarter believe the market will perform worse than it did in 2011.

Rob Siegmann, financial advisor with Financial Management Group, added that there is likely no “near-term end in sight” for equity markets’ volatility because the “EU solution will take time and the U.S. political ineptness will not change until November's election is known,” he said in a statement. “Expect a bumpy ride for 2012."

When asked about their main concerns for 2012, half of advisors said market conditions were their top worry. Thirteen percent said retaining clients was a main concern.

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