• Getting to gains could be painful: Advisors see correction or worse and are adding downside protection
• Expect 2-3 Fed Rate Cuts and Soft Landing in 2025

According to the InspereX Pulse 2025 Outlook Survey of 682 financial advisors released today, the vast majority of advisors said they expect the S&P 500 to be up 10% or more by year-end 2025 compared to where it was between November 6-13, 2024 (a low of 5929.04 and a high of 6001.35). More specifically:

• 67% expect the S&P 500 to be up 10%
• 14% expect the S&P 500 to be up 20%
• 2% expect the S&P 500 to be up more than 20%
• 10% expect the S&P 500 to be flat
• 7% expect the S&P 500 to finish down 10% or more

The majority (69%) of advisors believe equities will be the top performing asset class in 2025 followed at a great distance by cryptocurrencies (11%).

But the bull won’t be easy to ride: 80% of advisors said they expect to see at least a correction (drop of 10%) in the S&P 500 in 2025. More specifically, 33% see a drop of 10%, 31% forecast a drop of 15%, and 16% see a bear market (down at least 20%) at some point during the year. But 20% of advisors expressed extreme confidence saying the market won’t see a downturn in 2025.

To smooth the ride, 72% of advisors said they will probably or definitely add more downside protection strategies to client portfolios in 2025.

“Advisors are certainly bullish but many of their upside expectations are more in line with historical averages. Combine that with forecasts of high volatility with at least one correction or worse, and that means investors will need to tough out uncertainty to benefit from returns that may be harder to attain,” said Chris Mee, Managing Director of InspereX.

“With these expectations, it makes sense that advisors are adding more downside protection to client portfolios to help alleviate the fear that comes with volatility. This way, investors can stay invested with peace of mind and remain focused on their long-term objectives.”

The Fed and How the Economy Lands in 2025

More than two-thirds (68%) of advisors expect the Federal Reserve will cut Fed Fund Rates two or three times in 2025. Just 10% expect four or more cuts, while 5% expect the Fed to remain neutral. Just 2% expect one or more rate increases.

How will the economy land?

• 46% of advisors believe the Fed will eventually achieve a soft landing
• 25% expect a no landing scenario
• 22% believe the Fed has already achieved a soft landing
• 7% expect a hard landing

Post-Election Worries for Advisors and Investors; Investor Anxiety Dips

What worries advisors the most?

1. Geopolitics (31%)
2. Inflation (27%)
3. Market volatility (15%)
4. New Presidential Administration (11%)
5. Rising taxes (8%)
6. Interest rates (8%)

According to advisors, their clients are less concerned about the macro picture and place immediate risks as their bigger concerns. Advisors say client concerns are:

1. Inflation (35%)
2. Market volatility (29%)
3. New Presidential Administration (16%)
4. Geopolitics (12%)
5. Rising taxes (5%)
6. Interest rates (3%)

More than half (53%) of advisors said they would not make strategic changes to client portfolios based on the election results. Another 24% said they will add downside protection as a result of the election, 6% will be more conservative, while 17% said they will be more aggressive.

Asked to gauge their clients’ levels of anxiety toward investing right now on a scale of 1-10 with 10 the highest, the average was 5.1, down from 6, which has consistently been the average since June 2022.

Where Will Income Come From in 2025?

More than half (52%) of advisors said they will reduce the use of cash/cash equivalents to generate income for clients in 2025. Instead, 55% will increase client exposure to dividend-paying stocks, and 52% plan to use more structured products/market-linked notes. Another 58% plan to maintain their client exposure to individual bonds, 49% to bond funds/ETFs, 48% to variable annuities, 47% to market-linked CDs, and 45% to fixed annuities.

About the survey – View Survey Report

InspereX is the tech-driven fixed income and structured products distribution and trading firm. The InspereX Pulse 2025 Outlook Survey was conducted post-election between November 6-13, 2024 by Red Zone Marketing on behalf of InspereX. The 682 financial advisor respondents work at independent broker/dealers, RIAs, banks, regional firms and wirehouses. During the survey period, the S&P 500 high was 6001.35, the low was 5929.04 and it closed at 5985.38 on November 13.

About InspereX

InspereX was founded 25 years ago by Tom Ricketts, now our Chairman as well as the Executive Chairman of the Chicago Cubs. We pioneered delivering innovative, institutional-quality strategies and offerings to the retail market, and we’re now an industry leader in underwriting, marketing, and distributing a wide range of fixed income investments and structured products. Our ground-breaking investments, distribution, education, and technology have been recognized with dozens of awards. InspereX represents more than 400 issuing entities, distributes to more than 1,500 partners, and has underwritten more than $750 billion in securities. The firm has seven trading desks and more than 170 employees with offices in Delray Beach, Florida; San Francisco; Chicago; and New York City.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241125940972/en/