Financial advisors are predicting moderate growth in equities with some bumps along the way this year, according to a survey released today by Incapital, a distributor of fixed income securities and risk management investment solutions.

Half of the 396 financial advisors who took part in the Advisors’ Pulse survey last month feel that equities will increase by 5% to 10% by year end. Another 25% were more pessimistic and said returns would grow by only zero to 5%. The predictions are well below where 2020 ended after a rocky spring.

A smaller group, 16%, said they anticipate returns going up as much as 10% to 15% by year end, while 2% said they expected gains of up to 20% or more. Just 8% said they expected a down market in 2021, the survey said.

Although equity market return expectations for the year are moderate, volatility may still be an issue in 2021, according to 87% of the advisors who said there will be several market corrections. Value investing will continue to make a comeback over growth, the advisors predicted. Fifty-seven percent of advisors forecast rates on the 10-year Treasury will come in at 1% to 2%, while 38% said the rates will remain between 0% and 1%, and only 5% said rates will increase to more than 2%.

“Given the enormous amount of uncertainty and hardship from Covid-19 and other factors in 2020, it looks like advisors expect the equity market to slow down and catch its breath in 2021,” Chris Mee, managing director and head of wealth management solutions distribution at Incapital, said in a statement. “If the possibility of multiple corrections comes true, it could be a year of more pain than gain in equities. In this type of environment, risk management is critical for investors to stay invested to capture whatever gains may come so they can stay on track to achieve their long-term goals.”

Despite the challenges of 2020, most advisors ended the year on a positive note. Sixty-nine percent reported their revenue in 2020 was on par with 2019, while 25% reported an increase in revenue for the year. Only 6% reported a drop in revenue for 2020, the survey said. Almost one-third said they received more referrals in 2020 than in 2019, while 51% received about the same and 20% received less.

The pandemic has made some advisors rethink their infrastructure needs. Thirty percent said they will be—or are considering—reducing the size of their office space, and 16% said they might eliminate office space altogether. Only 12% of advisors are currently having in-person meetings with clients, while 38% said they would start doing so in this year's first half. The remainder are not yet considering it. Almost all advisors said they have become comfortable with virtual meetings.

“Working through the crisis is teaching us all a lot of lessons about how to serve clients,” Mee said. “As a result, the entire industry has adapted to new approaches and surroundings. The client experience lessons we learn from this difficult time will change the way we work forever.”