Advisor sentiment stays positive as six-month outlook dims

Advisor sentiment on the current economy and stock market remains above neutral. But the six-month outlook has darkened for a third straight month. The July WMIQ Advisor Sentiment Index, compiled by WealthManagement.com with Informa Engage, draws on responses gathered July 1–30. Retail-facing advisors are asked to rate conditions today, six months out, and a year out; the answers are weighted into readings on either side of 100. One component landed at 118. That was a three-point fall from the prior month. Another came in at 105. It slipped one point. Both are still positive.

The forward-looking responses are the more telling ones. Asked about the economy a half-year out, 40% of advisors expect a decline. A separate 26% expect improvement. That camp has dropped 12 points since June. The erosion runs deeper than one bad month: in May, 55% of advisors were positive on the short-term economy. It is also no longer accelerating. The improvement camp fell 17 points from May to June, then 12 more in July. That adds to 29 points over eight weeks, fast movement for a poll of professionals trained to hold a long view. The stock market takes a similar shape. In June, 45% of advisors expected gains over the next six months. By July, 29% did.

At a year out, opinions split. On the economy, 43% expect improvement. A comparable 42% expect decline. The remaining 14% see no change. On the stock market, 41% expect gains. 36% expect declines.

Current conditions explain why the index still prints above 100. The year-ahead split suggests advisors see a rough patch, not a permanent downgrade. Confidence today and doubt about the next six months are moving in opposite directions. For an RIA principal, that gap tends to surface in client conversations before it shows up in allocation changes.