Family Office
RIA confidence tempered by worry about inflation
Independent advisor confidence up slightly last month despite
oil-price woes. AdvisorBenchmarking's Advisor Confidence Index
(ACI) was up for the second month in a row in May, despite
widespread worry about the possible effect of energy-price
induced inflation putting pressure on an already delicate
economy.
"It's a classic pickle for the Fed," says Bill Ramsay of Raleigh,
N.C.-based Financial Symmetry. On one hand the central bank's
decision makers "are rightly concerned about the possibility of
energy prices being passed through on end products and services.
On the other they "also realize that high energy prices could
depress consumer spending."
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The ACI, which is based on Advisorbenchmarking's monthly survey
of 150 independent registered investment advisors, rose to 115.98
in May, up from 111.88 in April.
The advisor-sentiment scale goes from a "very negative" 33.33 to
a "very positive" 166.67; the mid point, 100, represents a
neutral outlook on the stock market and the economy. In other
words, the ACI is in broadly positive territory - has it has been
from its inception in April 2004.
Under pressure
Three of the ACI's four components rose in May. The assessment of
current economic conditions rose by 3.07%. The six-month-out view
on the economy was up a mild 0.43%. The 12-month economic outlook
- fairly healthy in April - fell by 2.07% in May. And the ACI's
sole market-related component - the view on equity markets six
months from now - slid 1.63% last month.
|image2| "We are beginning to see signs that the U.S. economy is
going to be coming under increased pressure over the next several
months," says George Cheatham of Columbia, Ky.-based American
Financial Consultants, one of the advisors surveyed. "New job
creation is anemic, higher fuel and health care costs are
shrinking paychecks to the point that the consumer has resorted
to longer term financing arrangements in order to free up
cash."
Austin Crowe of Atlanta-based TO Richardson puts his assessment
of the U.S. economy is starker terms. "We're looking for at least
a slowdown in the economy if not a full-blown recession," he
says.
Advisorbenchmarking is an affiliate of Rydex Investments.
-FWR
.
