As the U.S. presidential election comes to a conclusion, financial advisors find themselves looking for stability in uncertain times, and the future of the markets and the economy has them a bit anxious, according to a third quarter advisor survey by PGIM Investments, Prudential’s asset management arm.
“PGIM’s quarterly survey reveals that a majority of financial advisors are most concerned about how an economic slowdown and market volatility could impact their clients’ portfolios,” the company says. Sixty-six percent of advisors in the company’s quarterly survey said that an economic slowdown is their top concern for 2020, while 63% called out stock market volatility as concerning and 60% said geopolitical events. Only 38% said they feared a low return environment.
But the advisors in the survey say they fear different things in the future—circa 2023. Some 51% anticipated inflation uncertainty by that time and 42% feared trouble with interest rates. For 2023, they had fewer fears about econonmic uncertainty and turbulent markets.
Seventy-one percent of advisors expected increased market volatility in the coming year. Only 6% of them said they don’t expect it.
Despite a huge GDP rebound in the third quarter, a result of easing Covid-19 lockdown restrictions which gave economic activity a much-needed goose forward, financial professionals still worry about the ongoing effects of the pandemic on GDP in the next quarter and in the future.
Just over half of the advisors in the survey, 59%, said that a victory by Joe Biden would harm the stock market, while 65% said that a Donald Trump victory would help equities. When it comes to bonds, the feelings become more muted: Only 29% of the advisors surveyed though a Democratic win would hurt bonds in the third quarter, while 40% felt that way in the second quarter, PGIM said. More advisors thought a Republican victory would hurt bonds (15%) than did in the second quarter (when it was 10%).
The report noted that Ed Campbell, managing director at QMA, PGIM’s quant researching arm, is less apprehensive about a so-called “Blue Wave,” hurting stocks, noting that markets usually assimilate and price in risks of new political regimes. In fact, he says, “Historically, after the election has passed, we have seen a clearing of uncertainty, which creates a more constructive environment for stocks, as the outlines of the new administration’s policies takes shape.” (He wrote his analysis in a paper called “U.S. Election: Will Politics Derail the Markets?”)
PGIM’s survey data was collected by Escalent’s Cogent Beat Advisor. The sample included 400 financial advisors, who were polled between August 25 and September 5 of this year.