A majority of financial advisors in a survey released Monday by InspereX expect the S&P 500 to be up by 10% or more by year-end 2026, compared with where it was between Nov. 5 and Nov. 12 when the survey was conducted — a low of 6720.32 and a high of 6850.92.
This finding breaks down as follows:
- 60% expect the index to be up by 10% or more.
- 18% expect it to be down by 10% or more.
- 22% expect it to be flat.
Fifty-four percent of respondents said equities will be the top-performing asset class next year, while 12% said it will be bonds/fixed income and 10% said alternatives.
Their bullish outlook on equities notwithstanding, advisors also expect equities to be among the most volatile asset classes. Forty-eight said cryptocurrencies would be the most volatile, 31% specified equities and 6% said commodities.
Nine in 10 advisors said they expect the market to decline by at least 10% at some point next year, with 29% expecting a drawdown between 20% and 25%. Notably, just 9% said they do not expect a large drawdown in 2026.
Eighty-one percent of respondents said they probably or definitely will add more protection strategies to client portfolios next year.
Despite their cautious optimism about 2026 market returns, advisors expect a lot of volatility, and some are looking at a possible U.S. recession, Chris Mee, managing director of InspereX, said in a statement.
“If advisors are correct, they will be tasked with keeping clients calm and invested throughout the year, and while choppy markets present significant challenges, advisors have proven to be at their best during difficult market environments,” Mee said.
Red Zone Marketing conducted the pulse survey in early November among 856 advisors who work at independent broker-dealers, RIAs, banks and regional firms.
Eyes on the Fed
Two-thirds of advisors expect two to three rate cuts in 2026, according to the survey. Twenty-one percent foresee only one rate cut, while 8% expect Federal Reserve policy to be neutral.
Just 3% expect four or more interest rate cuts, and 2% expect one or more rate increases.
Asked about combating the effect of declining interest rates, 81% of respondents said they are preparing to or have already communicated with clients about potentially adding more risk to portfolios to achieve desired returns.
Half of advisors said their target return for most clients is in the 6%-8% range, 36% said they are seeking returns upward of 8%, and 9% said they aim to generate returns in line with the performance of the S&P 500.
Worry, but Also Glimmers of Opportunity
Advisors reported that the strongest macro headwind they are worried about is geopolitics, followed by market volatility, recession and inflation.
For clients, inflation is among the biggest concerns, beaten out by only geopolitics and market volatility, according to advisors.
Although volatility in 2026 is concerning to advisors, they also see silver linings in market turbulence:
- Volatility generates opportunities to demonstrate value — 75%
- Volatility increases client engagement and communication needs — 72%
- Volatility generates more referrals and new business opportunities — 35%
Just 7% said periods of volatility have no effect on their practice.
Asked to gauge their clients’ anxiety level as it relates to investing on a scale of 1 to 10, with 10 the highest, the average was 5.6, up from 5.1 when measured during the same period in 2024.
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