Advisers' No.1 worry for 2012? It's not losing clients

Financial advisers are increasingly worried about how U.S. stock markets will perform in the coming year, fearing that the troubles in Europe will drag down the economy in the U.S. Adviser confidence about the stock market in December fell by 5% between November and December, according to the November Advisor Confidence Index, which surveys 150 advisers about their outlook for the economy and markets over the next 12-month period. The respondents' outlook on the U.S. economy improved about 1.5% from the November reading. “We see no near-term end in sight for the equity markets' continued volatility because the EU solution will take time, and the U.S. political ineptness will not change until November's election [result] is known,” said Rob Siegmann, an adviser with Financial Management Group. “Expect a bumpy ride for 2012.” Half of the advisers surveyed said market conditions are their main concern for 2012, and a quarter of the respondents predict the stock market will perform worse next year than it did in 2011, according to the Rydex|SGI Advisor Benchmarking Survey. So far in 2011, the S&P 500 is up about half a percent. “Even if policy decisions were excellent in the U.S. in 2012 — and they will be far from that — [the U.S.] will not be immune to problems in Europe,” said Richard Coe, founder of Coe Financial Services Inc. “Those problems are so complex that they could easily go from bad to much worse.” RELATED ITEM Advisers who are fee based feel handcuffed » Advisers said they see no quick fix for Europe's problems even though EU leaders agreed earlier this month to work together towards fiscal stability. “We are now directly correlated with the events of Europe, while Europe tips toward recession and the U.S. slowly climbs out with slow, modest growth amid signs of economic improvement,” said Kenny Landgraf, an adviser with Kenjol Capital Management. “Someday, the hostage will be released, which should provide upside to U.S. and international markets.” With market performance being the top concern of advisers for the coming year, only about 13% of advisers said retaining clients was their biggest worry.