FACO: Advisors highlight shifting industry concerns

Financial advisors admonish their clients to ignore the short-term market noise and focus instead on long-term strategy. But how well do they follow their own advice?

To find out, Financial Planning analyzed over two years of Financial Advisor Confidence Outlook (FACO) survey data, including more than 4,000 responses from advisors across the industry. Month after month, Financial Planning asked advisors: “What is impacting your current advisory practice or business outlook?”

Across trade policy, inflation, interest rates and market uncertainty, experts say President Donald Trump’s influence since assuming office in January is hard to overstate.

Thinking about something like inflation figures and interest rates was relatively simple during the tail end of President Biden’s term, as more advisors discussed the Federal Reserve in their comments. 

But in recent months, swelling political pressure from President Trump on Federal Reserve Chair Jerome Powell has made that calculation more complicated for advisors, according to Eric Ludwig, director of the Center for Retirement Income and CEO of Stockbridge Private Wealth Management in Sun Prairie, Wisconsin.

“It seems as though people are concerned, yeah, about interest rates and ‘What are they going to do?’ But to what extent does the administration have in influencing those decisions?” Ludwig said. “I think that’s kind of a current theme that I’m hearing.”

That same political uncertainty extends far beyond the Federal Reserve, according to Jaclyn DeJohn, director of economic analysis at SmartAsset.

“You can read a little bit about Trump’s style, like ‘Art of the Deal,’ he talks about this method of negotiation that … we’re starting to really see … throughout all these trade talks,” DeJohn said. “I think the pattern is emerging that stabilization is ultimately what’s happening here, but there is going to be short-term volatility to make the negotiations happen.”

Still, even if some form of stabilization is on the horizon, current uncertainty has not been well-received by many advisors.

Among advisors surveyed, sentiment around the presidential election’s impact has been largely neutral over the past two years. But in recent months, negative views of the president have been on the rise, relative to neutral and more positive comments.

DeJohn said such sentiment is likely a reaction to inaccurate expectations among advisors.

“I think for a good portion of folks, the election results were surprising,” DeJohn said. “And then I think post-election, once you absorb that surprise, I think your sentiment then depends on how quickly you move and adjust to that.”

And for DeJohn, that same approach extends beyond the impact of the election to markets and news headlines more broadly.

“We’re all susceptible to headlines and scares. The market is definitely no different,” DeJohn said. “So I think it’s really going to be a dividing line amongst advisors. Who can keep that emotional aspect of investments and guidance in check, versus who can’t?”