Brinker Capital, a leading investment management firm, released results of the third quarter Brinker Barometer, a gauge of financial advisor confidence and sentiment regarding the economy, retirement savings, investing and market performance. The study was conducted online by Brinker Capital in October 2009.

“As has been the case for the last several quarters, financial advisors seem to be taking a ‘wait-and-see’ approach with their clients,” said John Coyne, President of Brinker Capital. “Their level of optimism related to the U.S. economy is almost identical to last quarter, with inflation remaining a critical issue and what seems to be a growing concern with the Administration’s handling of the financial crisis. At the same time, however, there are some positive signs on the horizon, most notably their outlook on emerging markets and their opinion that the U.S. stock market will finish the year on a positive note.”

Among some of the Brinker Barometer findings:

Economic Optimism Unchanged

Asked to rank on a 1-5 scale, with five being the highest, their level of optimism that the U.S. economy will significantly improve by year-end 2009, responses were almost identical to last quarter:

3Q 2009 2Q 2009
5 = 6% 5 = 3%
4 = 23% 4 = 24%
3 = 41% 3 = 41%
2 = 24% 2 = 27%
1 = 6% 1 = 5%

“This data indicates that advisors are still unconvinced that the economy has turned the corner,” noted Mr. Coyne.

Advisors Split on Recession

Notwithstanding recent reports that the U.S. economy has emerged from the recession, advisors are almost evenly split on the issue, with 52% agreeing with the reports and 48% not. When asked how likely it is that the US economy will encounter a “double-dip” recession, 63% of advisors said ‘somewhat likely,’ while 17% said ‘highly likely’ and 19% ‘not at all likely.’

Government Intervention

Despite the recent rally in U.S. markets, almost two-thirds of advisors (65%) believe the economic stimulus plan is not working, compared to 61% in the second quarter. Yet, of the 3Q group who don’t think the plan is working, 87% believe it still has a chance to ‘deliver on its promise’. As for the Obama Administration’s domestic and foreign policy, when asked which they consider to be more effective, a resounding 70% said ‘neither,’ with 17% and 12% siding with foreign and domestic, respectively.

Other Findings

- 83% of advisors believe emerging markets present greater growth potential than domestic markets in the near term

- 79% believe the Dow Jones Industrial Average will end 2009 at or higher than 10,000

- 63% believe that by the end of 2010 the U.S. economy will show significant improvement over 2009 year-to-date

- 52% believe the threat of inflation is the same as during the second quarter; 39% think it’s greater and 9% thinks it’s less

- 87% are sticking to their asset allocation strategies and are not trying to time the markets to rebuild client assets

- Advisors’ greatest concerns related to their practice are (in order): client losses, client anger, may have to postpone their own retirement, have to sell less profitable products to make up income shortfall, future of practice is in jeopardy and decreased likelihood of selling their practice.