Financial advisors’ inflation worries are easing, but more than half fear a recession could be on the way.
That’s according to Security Benefit’s Q2 Economic Outlook Index, which found that 6 in 10 registered investment advisors expect inflation to be under 3% in the next 12 months because of further tariff negotiations. The latest reading of the personal consumption expenditure price index dropped to 2.1% in April, the study authors noted, citing data from the Bureau of Economic Analysis.
“Optimism rose in the second quarter, with our Economic Outlook Index increasing to 60,” Mike Reidy, National Sales Manager, RIA Channel at Security Benefit, said in a news release. “That’s up 5 points from last quarter. However, advisors still see potential risks on the horizon as almost half (45%) believe there is at least a moderate likelihood the economy will be in a recession in the next 12 months.” This a strong increase, up from 29% of RIAs in Q1, meaning some economic anxieties remain.
But clients are becoming more anxious, with geopolitical tensions and Social Security the leading topics of client inquiries in the second quarter. The report noted that the volume of Social Security claims in May was 13% higher than the same period last year.
Advisors expressed varying views on President Donald Trump’s effect on the economy. The survey found:
45% of RIAs feel more positive since Trump entered office
17% feel about the same
38% feel more negative
Views on the economy varied by RIAs’ years of experience:
53% advisors with 20+ years of tenure were more likely to feel positive about the economy
28% with 3-19 years in the business felt positive
Clients Diversify
As clients diversify their assets, 47% of advisors say they have increased allocations to international equities, while about 30% are increasing allocations to U.S. equities. But 30% of advisors are making no tactical changes to client portfolios, while 33% already have made changes.
More than half of advisors (53%) say that since the start of 2025, more clients are interested in downside protection solutions like fixed index annuities or other structured products. But only 27% are increasing allocations of those classes.
“The uptick in RIAs fielding interest from clients in downside protection solutions is a healthy sign,” Reidy said. “If economic pressures deepen and volatility spikes again, building downside protection into any diversification strategy is fundamental to ensuring asset protection in an uncertain market environment.”
According to the survey, 47% of advisors believe Trump’s tariff policies are the biggest threat to the economy over the next six months, followed by geopolitical tensions (40%) and inflation (34%).
Clients Worry About Social Security
Clients’ top inquiry subject was geopolitical tensions, but Social Security was a close second.
Noting that the volume of Social Security claims in May was 13% higher than one year prior, the authors said that anxieties over the retirement program may be a motivator for many retirees to lock in fixed-income solutions like annuities.
The survey was conducted in May by Greenwald Research, which surveyed 100 registered investment advisors from across the United States, each managing significant assets and directly interacting with clients.
