As the stock market continues to hit record highs, most financial advisers expect it to show more volatility in the second half of the year.
Even so, nearly two-thirds of advisers are recommending that their clients maintain their current portfolio allocations, according to a new survey of more than 1,000 financial advisers by Eaton Vance, and they are less anxious about market conditions than they were earlier in the year.
“Adviser and client concerns dropped this quarter as markets rallied and volatility subsided,” John Moninger, managing director of retail sales at Eaton Vance Distributors said in a statement. “However, there is an underlying feeling of wariness as we head into September, driven by political uncertainty, geopolitical issues and the pace of U.S. economic growth.”
Nearly half of advisers are encouraging their clients to have more money in cash than they did a year ago. As the bull market enters its ninth year, more than eight in 10 advisers are trying to temper client expectations going forward.
Nearly three-quarters of advisers said they’d alter their approach to generating income for clients if interest rates rise. The top income-generating investments among advisers were dividend-yielding equity funds (recommended by 56 percent of advisers), municipal bond funds (32 percent) and high-yield funds (32 percent).
Advisers are keeping an eye on tax reform, but most think it will have a positive impact on their clients. Nearly two-thirds of those surveyed believe that substantial tax reform is still at least a year away, so they’re not advising clients to make any changes just yet.