Majority of Advisors Bullish on Equities for Remainder of 2023

(Business Wire) - According to the latest Pulse survey of 705 financial advisors by InspereX, more than half (53%) expect the S&P 500 to gain at least 10% by the end of the year. Only 11% expect 2023 market returns to be negative, while 36% said the stock market will be flat from where it was in late February.

“If 2022 wasn’t challenging enough for stock market investors, this year has been a ‘gotcha’ market – every time you start to feel confident, volatility reappears”
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In addition, 51% of advisors believe that 2023 will be the start of a prolonged bull market in equities. They have become increasingly confident about the US economy – on a scale of one-to-ten (lowest-to-highest) advisors rate their confidence in the economy at level six, up from level five when it was last measured in June 2022.

InspereX is the technology company transforming how fixed income and market-linked products are accessed, evaluated, and traded.

When asked which asset classes would perform best in 2023, 48% of advisors said equities, 17% said bonds, 9% said cash and cash equivalents and 8% said alternative assets. Only 1% mentioned cryptocurrencies.

“If 2022 wasn’t challenging enough for stock market investors, this year has been a ‘gotcha’ market – every time you start to feel confident, volatility reappears,” said Chris Mee, Managing Director and Head of Market-Linked Products Distribution at InspereX. “It shouldn’t be a surprise given all of the macro factors in play, including inflation, rising rates, and even more recently a black swan event in banking. But many advisors tell us they believe there is potential for reasonable market gains this year. Further, many believe we are heading into a new bull market. The question is, do their clients share their faith in the market after last year left so many clients more worried now than ever about volatility?”

Volatility: Tough on Investors, Good for Business

The majority (60%) of advisors said their clients are most worried about market volatility, followed by inflation (33%). Only 5% of advisors said their clients were most worried about rising interest rates and just 2% said rising taxes.

How worried are clients about volatility? Almost half (49%) of advisors said their clients seemed to be more worried than ever about it. It turns out 62% of advisors believe their clients are not nearly as comfortable with risk compared to what their risk tolerance indicates.

Perhaps this risk tolerance disconnect is why advisors also say that market volatility has been good for their business: 76% agree that market volatility has brought new clients to their door.

Of the 51% of advisors who said clients were not worried about market volatility, most (51%) said it was due to their already established portfolio strategy, while 39% said it was because of their financial planning process; the remaining 10% said it was because changes had been made to client portfolios to reflect current conditions.

When building client portfolios, 52% of advisors said they structure each portfolio individually, 34% use a model and 14% outsource portfolio development.

“This is the ideal time for advisors to shine,” Mr. Mee said. “Giving clients peace of mind and keeping them on course during volatile markets is possibly the greatest service an advisor can provide. Using customized strategies that in some cases include novel downside protection solutions, focusing on long-term planning, increasing communications all create deeper client relationships. Interestingly, a lot of advisors said volatility is bringing new clients to their door. To borrow from a familiar phrase, volatility is a terrible thing to waste. Seize the moment; do all you can to help clients through these challenging times and maybe new clients will be coming to your door via referrals from satisfied clients. That’s how advisors are growing their business this year.”

New Business in 2023

The top six ways advisors are growing their business in 2023 are:

  1. Referrals without asking
  2. Asking for referrals from clients and strategic alliances
  3. In-person networking
  4. Virtual education seminars
  5. Live client appreciation events
  6. Email marketing

In identifying the barriers to their success, advisors said market volatility, inflation and shrinking margins were their top challenges.

When asked this question three years ago (2020), the top challenges were repeated shutdowns due to the resurgence of Covid, volatile markets, and social/physical distancing; two years ago (2021) it was changing legislation, the administration, and repeated shutdowns due to resurgence of Covid; and last year (2022) it was volatile markets, inflation, and impact of geopolitical uncertainty.

About the Survey

These findings are from the eighth InspereX Pulse Survey, conducted online between February 21-27, 2023, by Red Zone Marketing. The 705 respondents represent advisors from independent broker/dealers, banks, and RIAs.

About InspereX

InspereX is transforming how fixed income securities and market-linked products are accessed, evaluated, and traded. Home to the pioneering BondNav® platform – one of the first cloud-native bond aggregation platforms – InspereX provides financial advisors, institutional investors, issuers, and risk managers deep access to fixed income market data across asset classes, as well as industry-leading origination, distribution, and education in market-linked products. Focused on delivering true price transparency, liquidity, execution targeting price improvement, and the information advantage gained through data aggregation, InspereX inspires greater confidence through the power of technology.

The firm is a leading underwriter and distributor of securities to more than 1,500 broker-dealers, institutions, asset managers, RIAs, and banks. InspereX represents more than 400 issuing entities and has underwritten more than $705 billion in securities. The firm has seven trading desks and more than 200 employees with principal offices in Delray Beach, San Francisco, Chicago, and New York City.


John Principio
River Communications

April 11, 2023


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