Financial advisors are growing noticeably less confident about the economic outlook, suggesting the gap between resilient markets and underlying macro expectations is widening.
The latest Advisor Sentiment Index found advisors pulling back from the optimism that pushed confidence near record highs earlier this year. Overall sentiment toward the economy fell 12% from May, while confidence in the stock market also declined, though both measures remain above the neutral 100 level.
That divergence is the story.
Advisors continue to view equities more favorably than the broader economy. Two-thirds describe current market conditions positively, and half expect stocks to improve over the next year. By contrast, 43% believe the economy will be weaker a year from now—the highest share expecting deterioration since the survey began two years ago.
For wealth managers, the findings reflect a familiar challenge. Markets can continue climbing even as economic confidence erodes, forcing advisors to distinguish between short-term market momentum and longer-term portfolio risk.
Inflation concerns and uncertainty surrounding the global policy environment were among the factors weighing on economic expectations, according to the survey. Even so, advisors have not abandoned risk assets altogether, suggesting caution has replaced outright pessimism.
The results also highlight an interesting contrast with broader institutional positioning. While advisors have become more skeptical about the economy, Bank of America’s latest global fund manager survey found professional investors at their most bullish levels since February, driven by enthusiasm for artificial intelligence spending, expectations for easier monetary policy, and improving global growth prospects.
That disconnect does not necessarily signal that either group is wrong. Advisors are often evaluating client planning horizons and economic resilience, while institutional investors can remain constructive on markets even if growth slows.
The latest sentiment readings suggest advisors are increasingly preparing clients for a more uncertain economic backdrop without concluding that the bull market has run its course.
For advisory firms, that may reinforce conversations around diversification, risk management, and client expectations rather than wholesale changes to portfolio strategy. As long as market sentiment remains stronger than economic sentiment, advisors are likely to continue balancing participation in equity gains against the possibility that a softer economy eventually catches up with asset prices.