While market and world events have caused independent investment advisors to maintain a somewhat conservative outlook, there are still a few bright spots in their forecast, according to a Charles Schwab survey of independent RIAs released Wednesday, August 25.
Nearly 60% of advisors surveyed said a double-dip recession in the U.S. was unlikely over the next six months, and more than 60% expected the S&P to increase during the same time period. Their optimism is tempered by the aftershocks of world events: more than 80% of advisors say their investment decisions have been impacted by the European debt crisis, half point to declines in the Chinese market, and 40% say the Gulf oil spill gave them cause for concern.
The semi-annual Independent Advisor Outlook Study measures the views of independent RIAs on a variety of topics. Nearly 1,200 independent investment advisors with $234 billion in total assets under management participated in the study between July 13 and July 23, 2010.
“In markets like these that are complicated for investors to navigate solo, there is a clear need for the kind of prudent, objective, and personalized guidance provided by independent investment advisors,” said Bernie Clark, executive vice president for Charles Schwab Advisor Services, in a prepared statement.
Among other findings, nearly three-quarters of advisors surveyed approve of Federal Reserve Board chief Bernanke’s leadership, and a majority thinks it unlikely that the U.S. Dollar will lose its reserve currency status over the next 24 months. Only 20% believe the Fed will raise interest rates over the next six months, a sharp drop from the nearly 40% who felt this way in January. Similarly, 28% expect inflation to increase, as compared to fully half of advisors who shared this sentiment in January.
Advisors note that they are actively working with their clients now to mitigate the impact of expected 2011 tax increases, citing as their top strategies:
? Realizing capital losses to help offset the expected increase in the capital gains tax
? Converting traditional IRAs to Roth IRAs
? Selling investment that have appreciated in value in advance of capital gains tax increases