Market Overview

The adviser/client optimism gap


by Michael Tarsala

Surprise! (OK, maybe not): Financial advisers are more bullish about the stock market than their rich clients.

A new study from Charles Schwab reveals that 45% of financial advisers are bullish about the market over the next six months.

In comparison, only 29% of folks with $1 million in investable assets are bullish.

It's not just a case of being less bullish: Chuck, er, Schwab says that millionaires are more bearish: 19% for clients vs. 13% for advisers.

Keep in mind, there may be a long-term bias of adviser bullishness at play here: Other reports in the past have reached a similar conclusion. After all, it's far easier to be bullish with OPM (other people's money).

Beyond that, here are two additional thoughts on what else the latest survey might be saying:

  • -- There may be a disconnect in risk tolerance, not just in market expectations. Call them overly cautious, but wealthy clients have a vested interest in a first-do-no-harm approach. Wherever you may turn for money management, here are some tips for finding a manager that can avoid the big losses -- which is more important than scoring the big gains. In particular, pay attention to the section of that post related to maximum drawdown.
  • -- Bullishness and bearishness may be too simplistic. People sometimes forget that markets trend in three ways, not two: There's up, down, and sideways. And there are reasons from a technical perspepctive to think that the next major move for stocks may indeed be sideways. If that's the case, a few strategies to at least think about include dividend stocks that will pay you to hold through the churn, and swing-trading strategies that take advantage of range-bound market and stock moves.

By the way, there are multiple dividend-focused models at Covestor, as well as several technical strategies that you won't find elsewhere.

Talk to us if you'd like to know how they work, their volatility, and more about the model managers.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at For information about Covestor and its services, go to or contact Covestor Client Services at (866) 825-3005, x703.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets


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