A new survey of financial advisors has found an 83 percent majority expect the S&P 500 to deliver gains by the end of 2025, though roughly the same number also predict bumps on the path to positive performance.
The InspereX Pulse 2025 Outlook Survey, conducted shortly after the recent US presidential election, gathered responses from 682 advisors across independent broker-dealers, RIAs, banks, regional firms, and wirehouses.
All in all, 67 percent of responding advisors expect the S&P 500 to rise by at least 10 percent next year, with 14 percent anticipating a 20 percent gain. A sliver of respondents – 2 percent – predict gains exceeding 20 percent. Meanwhile, 10 percent expect the index to remain flat, and 7 percent foresee declines of 10 percent or more.
“Advisors are certainly bullish, but many of their upside expectations are more in line with historical averages,” Chris Mee, managing director of InspereX, said in a statement revealing the results. “Combine that with forecasts of high volatility with at least one correction or worse, and that means investors will need to tough out uncertainty to benefit from returns that may be harder to attain.”
While 69 percent of advisors believe equities will emerge as the best-performing asset class next year, they're not harboring any illusions of smooth sailing: 80 percent anticipate at least one market correction, with 33 percent forecasting a 10 percent drop, 31 percent expecting a 15 percent decline, and 16 percent predicting a bear market.
To mitigate potential risks, 72 percent of advisors plan to add more downside protection strategies to client portfolios. That makes sense to Mee, who highlighted how it ensures "investors can stay invested with peace of mind and remain focused on their long-term objectives.”
Turning to monetary policy, 68 percent of respondents expect the Federal Reserve to cut rates two or three times in 2025, while just 5 percent foresee no changes.
Advisors remain divided on how the economy will fare, with 46 percent projecting a soft landing, 25 percent anticipating a harsh “no landing” scenario, and another 22 percent believing the Fed has already achieved a soft landing.
Geopolitical risks (31 percent) and inflation (27 percent) topped advisors’ list of concerns, followed by market volatility and the new presidential administration. By contrast, clients were most worried about inflation (35 percent) and market volatility (29 percent). Anxiety levels among investors appear to be easing, with advisors rating average client concern at 5.1 on a scale of 1 to 10, down from 6.
While 53 percent of advisors said they're not making strategic changes to their client portolios' makeup because of the election, 24 percent said they're adding ballast with downside protection after the results. Six percent said they're adjusting their sales to be more conservative, while another 17 percent are taking a more aggressive position.
As they look to generate income in 2025, many advisors plan to reduce reliance on cash equivalents, favoring dividend-paying stocks (55 percent), structured products (52 percent), and individual bonds (58 percent).
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