Clients aren’t panicking quite yet, but far-reaching anxieties cast a shadow over retirement planning. – Financial Planning

Clients might not be panicking just yet, but an array of concerns spanning everything from inflation to potential tax hikes and a stubbornly resilient pandemic have retirement savers worried, and in some cases responding with more conservative approaches to asset allocations.

That’s according to the latest Retirement Advisor Confidence Index, Financial Planning’s monthly barometer of business conditions for wealth managers.

This month’s survey found many advisors reporting that while they want to soothe their clients and keep them on track with their retirement plans, they’re fielding nervous inquiries from clients who see multiple trouble signs on the horizon.

“People are becoming more concerned about the economy and are looking to protect their assets with less risk,” one retirement advisor said.

With the memory of last year’s lockdown still fresh, some clients are fearful of a rerun, as new variants of the coronavirus emerge and cases in some regions are spiking again.

Couple those fears with worries about changes to tax law that could raise rates, and many clients are feeling less than sanguine about their nest eggs in the near future.

“Clients have been concerned about the stock market regarding the potential tax changes, and possible restrictions due to the pandemic,” one advisor said.

?url=https%3A%2F%2Fsource media brightspot.s3.amazonaws.com%2F0c%2Fbf%2F474a3a0d4261813b7095b8a27dfc%2Fequities

Those anxieties have prompted some clients to move retirement assets away from the stock market. The component of the RACI survey that tracks retirement investments in equities fell four points to 58.9 in November.

RACI scores above 50 indicate upticks in confidence, while scores below that mark signify a decline.

So November’s equities score, though it stands as the second-lowest mark of the year, continues a long streak of fairly high confidence in equities throughout 2021.

?url=https%3A%2F%2Fsource media brightspot.s3.amazonaws.com%2F85%2F72%2F2509e69141bf9ec82a28713ff89a%2Frisk tolerance

Another key metric, the RACI component that tracks risk tolerance, veered into weaker territory, posting a November score of 46.8, down 4.7 points from October and 10.2 points from the same period last year.

“Clients are getting nervous about the markets and have had a lower risk tolerance, and with many clients close to retirement, they are naturally getting more conservative,” one advisor said.

Overall, the composite RACI score for November checked in at 51.6, off 2.3 points from October and down two points from the same period last year. Composite RACI scores have been drifting down in the later months of the year, off slightly from the mid-50s, where they had hovered for most of 2021.

?url=https%3A%2F%2Fsource media brightspot.s3.amazonaws.com%2F80%2F02%2Fc39acb3c42418d54beec0372a276%2Ftotal products

Overall retirement plan activity seemed to dip in November, as well. The component of RACI that tracks new participants enrolling in employer-sponsored retirement plans ticked up half a point, but the measures of total dollar contributions to plans and number of products sold to clients both slipped more than three points. The element that tracks product sales notched a score of 54.6, the lowest mark in a year.

Still, while advisors related the sense of unease that clients are feeling, many said that it has yet to snowball into the kind of panic that would lead clients to want to make major changes that upend their retirement plans.

“Clients are a bit more nervous and locking in some profits,” one advisor said, “but not large changes.”