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FAs Love Trump, Worry About Generating Income

By Alex Padalka May 15, 2017

Financial advisors love the heck out of U.S. President Donald Trump and think he’s generally good for business, but they’re increasingly worried about generating income in their clients’ accounts in light of the Federal Reserve’s anticipated rate hikes, according to the second-quarter results of money manager Eaton Vance’s “Advisor Top-of-Mind Index.”

Income ranked 16% higher among advisors’ points of concern in the second quarter compared to the first, according to a survey of 1,001 financial advisors conducted by Eaton Vance from March 29 to April 20.

The 125.8 ranking is the highest it’s been relative to a 100 baseline when the survey started in April 2014, according to Eaton Vance. While sentiment on equity markets remains positive, “advisors have trepidations about what lies ahead,” John Moninger, managing director of retail sales at Eaton Vance, says in the press release accompanying the survey.

In addition to rising rates, advisors are concerned about policy changes and how the two effects could together impact both equities and bonds, he says. Only 7% of advisors think the market is undervalued while 39% believe it’s overvalued, according to the survey.

Meanwhile, advisors are optimistic about Trump's presidency with 76% agreeing he’ll have a positive impact on the stock market, 62% thinking he’ll be good for the U.S. dollar and 64% feeling he’ll have a positive effect on taxes. A resounding 80% say Trump’s administration will boost their businesses, the survey found.

But 49% of advisors believe that Trump will be the primary cause of volatility this year, Eaton Vance says.

Still, FAs are slightly less worried about managing volatility than they have been in recent months, according to the survey. After reaching a peak of 129.7 in the third quarter last year, volatility now ranks 111.5 on the index.