CNBC reported on its All-America Economic Survey this morning. Some of the key findings follow.
- The national mood remains as downbeat as it has since the financial crisis began in 2008.
- 27 percent of survey respondents think the economy will get better in the next year, down 10 percentage points from a year ago.
- 61 percent say the current state of the economy is poor, among the worst readings in the five-year history of the survey.
- Homeowners look for their houses to decline in value by a half percentage point in the next 12 months, unchanged from the outlook in the June survey.
- 53 percent of Americans believe now is a bad time to invest in the stock market, a survey record.
- Americans see their wages falling by one percent on average over the next year, a deterioration from the 0.7 percent decline in the June survey.
I commented yesterday that money managers and investment advisors need to adapt their “elevator speeches” and marketing to changing conditions. This negative outlook overall needs to be addressed by your investment approach and reflected in your marketing.
However, we are all prone to recency bias, meaning that we tend to extrapolate recent events into the future indefinitely. If the news changes, so will the public’s views. And when the news changes (or is seen to change), public sentiment can turn very quickly (just ask the Republican presidential candidates). Moreover, surveys such as this can be less accurate than we often assume, as Barry Ritholtz points out this morning.
What that says to me is that investment advisors need to be aware of where the public is coming from and communicate accordingly, but should also maintain a general consistency of investment approach and communicate that too. Clients and prospects will be comforted to know that you have “been there before” and have plans and procedures in place to deal with market difficulties.
The investing public is scared today and understandably so. As advisors, we need to provide that public with good reasons to be less afraid and to believe that the risks they face are being handled appropriately and well.