August is giving April a run for the distinction of being the cruelest month. Perhaps you can chalk it up to the bitter Congressional negotiations over extending the federal debt limit, the persistent European debt crisis, and the wild swings in the stock market, but sentiment among registered investment advisors over the outlook for the American economy was markedly more pessimistic that month, according to TD Ameritrade Institutional’s Advisor Index survey.
Fifty-two percent of advisors who were polled in August described themselves as being “somewhat” or “very” pessimistic about the U.S. economy, up sharply from 18 percent in March/April and 22 percent in April 2010. Those advisors who described themselves as being “very” or “somewhat” optimistic about the economy fell from 56 percent last spring to 22 percent in August.
The dour sentiment may be dampening RIAs’ willingness to spend on their practice. The survey found that just 23 percent were planning to increase spending, down from 34 percent last spring. The percentage who said they would decrease spending rose from 10 percent last spring to 14 percent in August.
The pessimism didn't appear to extend to the advisors' perception of their own career; 8 out of 10 said they are somewhat to completely satisfied in that department.
The telephone survey of advisors at 502 RIAs took place from Aug. 16 to Aug. 26. It has a margin of error of plus or minus 4.4 percent.