Advisers feeling better about the economy and their clients – and it shows

Brinker Capital survey finds investment outlook improving, as well despite some nagging concerns

Nov 5, 2013 @ 1:35 pm

By Jeff Benjamin

Financial advisers, and their clients, are generally feeling better about the state of the U.S. economy, according to the most recent “Brinker Barometer” survey by Brinker Capital Inc.

Even so, they are worried about the ineffectiveness of the federal government and view increased regulatory oversight as a big problem. To their way of thinking, cash as the least risky asset class right now, according to the quarterly survey of 225 advisers, which was conducted in October.

When asked to compare the current state of the U.S. economy to where it was a year ago, 49% of respondents said it is in a better place today, 32% said it is about the same, and 19% said it is in worse shape.

“It's been a long time coming, but financial advisers are finally feeling good about the economy and their clients' financial diagnosis for the future,” Brinker president John Coyne said. “What's particularly remarkable about this rise in confidence is that advisers were able to see beyond the then-looming government shutdown, and the country's tarnished reputation on the international stage, to focus on the longer-term prospects for America's economic future. It will be interesting to see how this level of sentiment holds up in the final quarter of 2013.”

Asked if they feel their clients are in better financial shape than they were a year ago, 69% of the advisers surveyed said their clients are better off than they were a year ago, 29% said they are about the same, and 9% said their clients are worse off today.

Mr. Coyne note that advisers' answers about where they plan to allocate future client assets as an indicator that the investment mood is improving.

Equities and alternative investments stood out as the categories where advisers plan to increase their allocations this year compared with last year, with 57% saying they plan to increase exposure to alternatives, and 54% planning to increase equity exposure.

Private equity, international investments, and emerging markets were also categories gaining favor among advisers.

By far, the category losing the most luster over the past year was fixed income, with 63% of advisers saying they plan to allocate less to the category this year, compared with last.

“We know that investors poured $1.3 trillion into fixed income from 2009 through 2012, but through July of this year we saw $125 billion move out of the category,” Mr. Coyne said. “It's clear from what advisers are telling us that the money is now moving to absolute return and equity strategies.”

But even if there is a general sense of optimism, a lot of advisers are still seeing challenges is getting some clients to take risks.

More than 40% of the survey respondents said their clients have expressed a desire to increase their allocation to cash during the past quarter.

On politics and the general sense of America's standing on the world stage, advisers remain frustrated, with 64% saying the country's status and reputation is weaker now than it was a year ago, and 61% of advisers listed an ineffective Congress and president as their biggest concern.

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