Serving as a bell weather to the investment market's protracted uncertainty, roughly half of independent registered investment advisors (RIAs) surveyed say a double digit recession is unlikely over the next six months, according to Charles Schwab's 10th semi-annual Independent Outlook Study released today. Meanwhile, 28 percent of investment advisors surveyed  think a double-dip recession is likely, unchanged from a year ago.

When asked to classify their six-month stock market outlook, 37 percent of advisors classified themselves as "bulls," down from 56 percent in January, while 22 percent saw themselves as "bears," up from 10 percent in Schwab's January survey. However, 41 percent of advisors surveyed said they were neither bull nor bear, compared to 35 percent percent in January.

An estimated 28 percent of advisors think a double-dip recession is likely, unchanged from a year ago. However, 52 percent believe that a double-dip recession is unlikely, down from 59 percent of advisors who responded to Schwab's July 2010 survey.

The survey, which queried over 900 RIAs in February and March, indicated that estimated 58 percent of advisors expect the S&P 500 to rise in the next six months, down from 77 percent in January. However, that percentage is more in line with advisors' outlook of July 2010 when 63 percent expected the S&P 500 to rise.

Independent advisors are also split over a number of other economic and market indicators.

An estimated 58 percent said they think inflation will increase in the next six months, compared to 64 percent in January. An estimated 47 percent believe that consumer savings will increase, compared to 43 percent in January. And only 36% believe that consumer spending will increase, compared to 68 percent in January, and 39 percent expect that unemployment will increase, up from 17% in the last study. Looking at energy prices, 23 percent of advisors surveyed expect them to soften, compared to only 8% in January.

Also reflecting market uncertainty, advisors provided mixed views about investing over the next six months. Overall, RIAs are still partial to to equity investing with 32 percent like to invest in more domestic large cap compared to 39 percent in January. Looking forward, 21 percent of advisors say they're planning to invest more of their clients' portfolios in international large cap in emerging markets while 17 percent say they'll increase investment in international large cap stocks in developed markets.   

Clients on the other hand, according to the survey, are opting to take a conservative "hold steady" position with their investments with an estimated 46 percent indicating they are maintaining their existing portfolios with making contributions, nor taking gains nor withdrawals. Roughly 20 percent say they will be adding assets to their portfolios while another 17 percent say they'll be drawing down on their portfolio's existing principal.            

Advisors were also asked to identify factors that they believe will either improve or pose risks to market performance over the next six months.

Factors that advisors expect to improve market performance are:

higher corporate earnings expectations (52 percent)

a decrease in the unemployment rate (43 percent)

an increase in corporate spending (37 percent)

stability in the European debt crisis and increase in consumer spending (both 36 percent).

 

Factors that advisors expect will pose risks to market performance:

an increase in the unemployment rate (57 percent)

continued European debt crisis (47 percent)

higher energy and other commodity prices (36 percent)

a decrease in consumer spending (35 percent).