The Federal Reserve elected not to raise interest rates on Thursday, citing weakness in foreign markets and lower levels of inflation than expected -- and most advisors were not surprised.

According to a Fidelity study released ahead of the Fed’s announcement, only 18 percent of advisors expected rates to rise.

Lee DeLorenzo, president of Garden City, N.Y.-based United Asset Strategies, was among the majority.

“It was a decision that I personally expected, but our firm was 70 percent certain of an increase,” DeLorenzo says. “The majority of the pundits expected an increase, though recent changes in the yield showed that the bond market guessed right at the last minute.”

Expecting a run-up in yields, DeLorenzo says United Asset Strategies sold its U.S. Treasury bond holdings for a profit, and is buying the S&P Regional Banking ETF (KRE).

“We believe that regional banks will benefit by a rate increase and would not have significant downside if they didn’t hike,” DeLorenzo says.

Tom Siomades, managing director and head of the Hartford Funds Investment Consulting Group, based in Radnor, Pa., thought that rates would rise ahead of Thursday’s decision.

“It’s clear, even from what Janet Yellen is saying, that we’re still strong domestically,” Siomades says. “We’re not at 10 percent unemployment. We have healthy job growth, 3.7 percent GDP growth. The economy is healthy. Ultimately, what we need from the Fed is some guidance; that is what the markets are looking for. I would have liked to see a hike because I want to see some action.”

Steve Wood, chief market strategist at New York-based Russell Investments, says the decision not to raise rates was actually a response to unemployment.

“Even though unemployment is getting closer to the Fed’s target zone, Janet Yellen was also very clear that there were other factors in the labor market aside from unemployment rates, mentioning labor participation and other measures without going into specifics,” Wood says. “It’s clear that in the committee’s mind, there is still slack and softness in the labor markets that’s not captured by the headlines.”

At Vanguard, senior economist Roger Aliaga-Diaz doesn’t believe any increase in rates is warranted this year.

“The Fed's decision to hold off on a rate increase is a clear indication to the markets that this rate cycle will be different, with international conditions and U.S. dollar strength weighing more on the decision than in the past,” Aliaga-Diaz said in a statement. “We are concerned with the Fed's acknowledgement of recent market volatility in its decision. The Fed runs the risk of being held captive to the markets, as, paradoxically, much of that volatility is due to the anticipation and uncertainty around when the Fed will move.”

Indeed, Siomades says the uncertainty surrounding the Fed’s decision-making could have a harmful effect on the markets.

“I despise the Super Bowl pre-game shows that start at noon on game day, but that’s what is going to happen here,” Siomades says. “It’s going to become a circus; everyone’s going to perceive the data differently. If more people think there’s a case for a Fed raise, then we’ll plan in advance and get locked in. We’re getting into a bad cycle.”

Wood believes that the Fed has intentionally increased the lead time before announcing changes in monetary policy.

“I think a lot of the volatility during the summer was associated with what would be the first rate hikes in almost a decade,” Wood says. “The Fed is now using forward guidance and their ability to effectively communicate to lay the groundwork for what will be a very long normalization process. They’re sending messages and gauging reactions before announcements are made. I remember Alan Greenspan and his briefcases. We’ve come a long way from waiting to see if he had the big briefcase or the small brief case.”

Advisors should warn their clients that volatility may increase, Siomades says.

“The Fed has already been tightening in some respects since it discontinued quantitative easing,” Siomades says. “This is an opportunity to sit down with clients, clearheaded, and discuss how this affects them. If they have a plan, and potentially moving 25 basis points in either direction makes a difference, it’s time to revisit the plan. It’s a good time to revisit anyway because advisors can assess their feelings about volatility. If they can’t stand the volatility, it’s time to do something different.”

Even advisors and clients who thrive in the active management environment should keep their eyes on the long term, DeLorenzo says.

“Advisors should tell clients that we know the direction, but not the timing,” DeLorenzo says. “Invest to meet your goals so you don’t have to react to all this noise.”

Wood agrees, arguing that active management best suits the current economic environment.

“Advisors should tell their clients that the uncertainty and volatility is a reminder of why one needs to be properly allocated and diversified,” Wood says. “Bonds have gone downward, the Reserve along with the European Central Bank and the Bank of Japan have told us that this is going to be a low-yield environment for the long term. That suggests that clients should consider globally diversified, actively managed, multi-asset strategies.”

For clients at or near retirement, advisors should contrast the Fed’s behavior in recent years with the response during previous periods of inflation, Wood says.

“The experience they’ve had with inflation in the 1970s isn’t going to be typical of the experience that they’ll have going forward,” Wood says. “Someone in their 30s or 40s has had virtually no experience with inflation, but a person in their 60s probably remembers what it was like, that will create different responses to the current monetary policy.”

Siomades says that he understands the Fed’s decision, but is concerned about inflation.

 “Yes, the economy is healthy, but it’s not manifesting itself in inflation,” Siomades says. “Commodity and energy prices are down, and there’s all of this global tension. The Fed has always been a little myopic about how it looks at the U.S. economy versus the global economy. Hearing them say something that wasn’t entirely focused on our country, it shows a huge step in the Fed growing up.

“They weren’t so much saying we have an issue with the U.S. economy, we have an issue globally, and that we need to do our part to make sure the global economy is stable. Hopefully, that will benefit us.”

At the deVere Group, CEO Nigel Green says the Fed’s decision, while likely welcomed by foreign economies, could also initiate an increase in volatility abroad.

“The U.S. economy is no longer in the Emergency Room, so by not raising interest rates, the Fed is, in effect, sending out a clear message that it is nervous about China, and the impact a potential hard landing could have on U.S. and global growth,” Green said in a statement on Thursday.  “This concern over global developments is bound to prompt uncertainty too.”