Most Advisors Expect Stock Bull Market in 2023: Survey

“This is the ideal time for advisors to shine,” says Christopher Mee, a managing director at InspereX.

Fifty-three percent of financial advisors in a new survey expect the S&P 500 to gain at least 10% by year-end, while 36% said the stock market will be flat from where it was in late February, InspereX, a brokerage firm, reported Tuesday. Only 11% of advisors expect this year’s market returns to be negative.

Slightly more than half of survey participants said a prolonged bull market in equities will start in 2023. Advisors have become increasingly confident about the U.S. economy, now rating their confidence at 6 on a scale from one to 10, up from 5 in June 2022.

Asked which asset classes would perform best this year, 48% of advisors said equities, 17% said bonds, 9% said cash and cash equivalents, and 8% said alternative assets. A mere 1% mentioned cryptocurrencies.

“If 2022 wasn’t challenging enough for stock market investors, this year has been a ‘gotcha’ market — every time you start to feel confident, volatility reappears,” Christopher Mee, head of market-linked products distribution at InspereX, said in a statement.

Still, Mee said, many advisors see potential for reasonable market gains and are looking forward to a new bull market. “The question is, do their clients share their faith in the market after last year left so many clients more worried now than ever about volatility?”

Red Zone Marketing conducted the survey online in February among 705 advisors from independent broker-dealers, banks and RIAs.

Perspectives on Volatility

Sixty percent of advisors surveyed said their clients were most worried about market volatility, while 33% cited inflation as their main concern. Only 5% of advisors said their clients were most worried about rising interest rates, and just 2% said rising taxes.

Not only are clients worried about volatility, 49% of advisors said their clients were more worried than ever about it. Sixty-two percent of advisors believe their clients are not nearly as comfortable with risk as their risk tolerance indicates.

InspereX surmised that this risk tolerance disconnect may be why 76% of advisors agreed that market volatility has been good for their business, bringing new clients to their door.

Of the advisors who said clients were not worried about market volatility, 51% put this down to their already established portfolio strategy and 39% to their financial planning process. The remaining 10% said it was because changes had been made to client portfolios to reflect current conditions.

When building client portfolios, 52% of advisors said they structure each portfolio individually, 34% use a model and 14% outsource portfolio development.

“This is the ideal time for advisors to shine,” Mee said. “Seize the moment; do all you can to help clients through these challenging times and maybe new clients will be coming to your door via referrals from satisfied clients. That’s how advisors are growing their business this year.”

New Business in 2023

Here’s how advisors are growing their business in 2023, according to the survey:

Advisors said market volatility, inflation and shrinking margins are the top barriers to their success this year.

The challenges have shifted over the past three years. In 2020, the challenges were repeated shutdowns due to the resurgence of the coronavirus, volatile markets and social/physical distancing.

In 2021, the big barriers to business growth were changing legislation, the administration and repeated shutdowns prompted by another virus surge. Last year, the challenges were volatile markets, inflation and geopolitical uncertainty.

(Image: Shutterstock)

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