Market Optimism Plummets Among Investors and Advisors

Financial professionals and their clients are increasingly expressing deep pessimism about the markets and the investment outlook, according to survey results released Tuesday by Greenwald Research, part of its annual Retiree Insights Program.

In particular, they’re worried about the potential toll of inflation, a possible recession and global conflicts on their resources.

In a survey of more than 1,000 financial consumers 50 to 70 years old with at least $200,000 of investable assets, Greenwald Research found that their optimism about their investments had dropped from 67% a year ago to 31% today. Meanwhile, pessimism has shot up from 7% to 36%.

Those sentiments are mirrored among some 300 financial professionals who participated in the survey. Their optimism level has slumped from 78% in 2021 to 34% today, while pessimism about the markets and investment outlook jumped from just 3% to 25%.

Financial professionals’ pessimism is also reflected in their expectations for investment returns. On average, they’re looking for equity returns of 6% over the next year, compared with 9.7% in 2021 and 7.8% in 2020.

Combined with current low expectations for fixed returns, they estimate a total return of just 4.3%.

Perceptions of Financial Security Fall

Consumers’ perceptions of their own financial security have dropped to levels last seen at the height of the pandemic, the survey found. Only 43% of retirees said they feel highly secure today — down from 56% — and just 36% of pre-retirees feel that way, down from 45%.

The malaise is evident in consumer expectations about future market recoveries. A year ago, some 60% said future recoveries would be as fast or faster than the record-fast pandemic recovery. Only 44% now consider that likely.

As a result — making the current environment more worrisome, according to Greenwald Research — 32% of consumers and 37% of financial professionals are more concerned about consistent small investment losses over time, compared to 18% of consumers and 27% of professionals who worry more about a single major loss.

Response to Biggest Worries

Seventy-nine percent of consumers said both a high level of inflation and an economic recession are their biggest worries, according to the survey. Global conflicts and crises were ranked third, cited by 71% of respondents.

“The optimism that followed the rapid economic recovery from the pandemic has evaporated,” Doug Kincaid, Greenwald’s managing director for financial services, said in a statement. “It’s clear that financial consumers need help navigating the current economic environment to regain confidence in the future.”

Kincaid noted that the survey findings show that consumers are engaging more closely with their advisors, and are increasingly looking to their employers to provide financial wellness resources.

Need for Advice

Survey results indicate that consumers are meeting with their advisors more frequently, both in person and virtually. Two-thirds of respondents reported they have met with their advisors at least once in person in 2022, up from 45% in 2021, and 40% had at least one virtual meeting, up from 31%.

About half of respondents want in-depth discussions about their finances once a year, and well over a third want quarterly check-ins. Perhaps more important to nearly all respondents in working with a financial professional is accessibility, most commonly seen as getting a response to an inquiry within 24 hours, according to Greenwald Research.

The employer-provided financial wellness resources respondents expressed the greatest interest in include:

• Personalized financial goal setting: 55%, up from 36%
• Access to free or subsidized personalized financial advice: 54%, up from 40%
• Education on planning for and managing health care costs: 52%, up from 45%
• Financial education with financial professionals, in person or online: 51%, up from 36%