RIAs remain cautiously optimistic about the U.S. economy, according to the RIA Economic Outlook Index, released Tuesday by Security Benefit in partnership with Greenwald Research.
The index, which measures RIA sentiment on a scale from 0 (extremely pessimistic) to 100 (extremely optimistic), fell to 58 in the third quarter, down from 60 in the previous three-month period.
With U.S. inflation hovering around 2.7% in August, 69% of advisors in a survey said they expect inflation to remain below 3% over the next year, while another 23% see only a modest uptick into the 3%-3.9% range.
“Advisors remain broadly confident about the road ahead, even as they keep a close watch on shifting market dynamics,” Mike Reidy, national sales manager for the RIA channel at Security Benefit, said in a statement.
“With many anticipating increased volatility as economic pressures, global tensions and tariffs remain in place, RIAs are positioning portfolios to capture upside while staying prepared for potential changes in Fed policy.”
Greenwald Research conducted an online survey in August among 100 RIAs from across the United States, each of which manages significant assets and directly interacts with clients.
Improved Inflation Expectations
Following the Federal Reserve’s cut of short-term rates to a target range of 4% to 4.25%, 84% of advisors surveyed said they expect another rate cut later this year.
In anticipation, 31% reported that they have already increased client exposure to equities, underscoring how closely advisors are aligning portfolios with the shifting rate environment, Security Benefit said.
Many are positioning portfolios to capture growth opportunities while remaining mindful of the ripple effects of an extended softening cycle, and are considering products that include protection against market loss like fixed indexed annuities.
Fifty-one percent of advisors said they have expanded educational efforts since the start of year, often pairing this with greater emphasis on relationship management and client acquisition.
Mixed Market Forecasts
Some two-thirds of RIA respondents said they expect the S&P 500 to rise over the next 12 months, although they disagreed on how strong that growth will be.
Eighteen percent see gains of 10% to 15% or more, while 31% foresee gains in the 6%-9% range. Another 15% anticipate a more modest 3%-5% increase.
Only 15% of advisors expect the index to decline, suggesting that despite differing views on the pace of growth, advisors still see underlying market strength, Security Benefit noted.
In addition, 59% of RIAs believe that stock market volatility in the next 12 months will be about the same or lower, while 42% are bracing for headwinds over the next year.
Beyond market sentiment, RIAs are working to close gaps in how investors plan for the future, with medical costs moving to the forefront. Sixty-three percent said their clients underestimate the likelihood of needing long-term care, a concern that grows more pressing as health care costs rise and retirement hurdles grow.
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