Adviser confidence in the economy and stock market sank this month for the second consecutive month, according to Rydex AdvisorBenchmarking Inc., a Rockville, Md., unit of Rydex Investments.
The Advisor Confidence Index fell 14% from a month earlier, to 79.07, the unit said Tuesday.
Rydex Investments said that in a survey conducted this month, advisers indicated that "they support many of the government's moves, have stepped up their communication and reassurance efforts, and, for the most part, have stayed the course with their investment strategies, having made pre-emptive moves before the major fallout in late September and October."
Eighty-three percent of the advisers surveyed said they have called their clients to discuss the market decline, and 66% said they have sent e-mails to their clients. Almost half the advisers (44%) said they have been meeting face to face with clients.
Movement within client portfolios has been relatively low, according to Rydex. Most advisers said they are maintaining the allocations in their clients' portfolios. More than half the advisers who have changed allocations say that they moved all their clients' money to cash before the financial crisis, and that doing so has helped the clients weather the current market conditions.
About 51% of the advisers surveyed plan to maintain asset allocations in the near future; 12% have increased allocations to alternative investments in the past few weeks, and 37% used alternative investments before the crisis to help clients handle volatile market conditions. Twenty-two percent of the advisers are planning to increase allocations to alternatives in the near future.
Two out of three advisers say the government's Wall Street rescue plan will work, and 70% of advisers said they support the financial bailout.
However, 43% of advisers did not support the Securities and Exchange Commission's actions regarding short-selling.