Advisors are becoming a gloomy lot when it comes to the markets.
The latest version of Russell Investments’ Financial Professional Outlook has revealed that only 64 percent of advisors are holding a positive outlook on the markets for the next three years.
Not only is that down substantially from its level in 2014, when it was at a high of 87 percent, it’s the lowest level the rating has hit since the outlook was begun in 2010.
More than half of the advisors surveyed—56 percent—cited concerns about future market volatility.
Clients aren’t all that sanguine about the situation, either, with client uncertainty hitting 53 percent over worries that include issues surrounding China and emerging market economies as a whole.
Such concerns may be having an outsized impact on advisor-client conversations and serving as a distraction from long-term planning efforts.
Nearly a third of advisors surveyed (30 percent) claim that as many as half of their clients are failing to stay on track to maintain enough assets to support their preferred lifestyles in retirement.
More than half of advisors (55 percent) cited setting reasonable expectations around spending policies as one of their key challenges, and an additional 44 percent found similar struggles in maintaining the sustainable spending plans they do create with clients, given factors such as increasing life spans and escalating health care costs.
Only 18 percent of advisors said that they don’t believe yield-focused investment strategies (or strategies that rely on dividends and interest alone to provide income) are a strong option for some or all of their clients.
Yet, despite the fact that many advisors see these strategies as viable options, many also noted potential deterrents including capital erosion due to inflation (53 percent of advisors) and higher credit risks (40 percent).
Only 11 percent of advisors would recommend them to the majority of their clients.
Of the advisors who said that yield-focused strategies were not a good option for all of their clients, more than two thirds (70 percent) would recommend a total-return approach that looks at the sum of interest, dividends and capital appreciation when considering the ability to generate income.