Advisor outlook turns negative as Iran war escalates

The U.S. war with Iran is weighing on markets and financial advisors alike, according to the latest Financial Advisor Confidence Outlook (FACO) survey.

Processing Content

The survey, which polled more than 200 advisors across the industry from March 2 to 3 on their views of the economy and other key indicators on a scale from -100 to 100, showed overall confidence slipping into negative territory. The index fell to -6, its lowest reading since last May.

Survey data suggests that the launch of military operations by the U.S. and Israel against Iran on Feb. 28, and the retaliatory strikes that followed, was a major factor behind the worsening outlook. Since the survey was conducted, the human and economic toll has grown.

A U.S. forces strike on the first day of the war killed at least 175 people at a girls’ school, Iranian health officials and state media said. In the subsequent days, the conflict expanded across the region. In Lebanon, Israel’s strikes on the Iranian‑backed Hezbollah militant group have killed over 300 people and displaced more than 500,000. Iran’s U.N. envoy reported that more than 1,300 Iranian civilians have died in the war. On Sunday, the U.S. military confirmed the death of a seventh service member from injuries sustained during Iran’s initial attacks across the Middle East.

After a 1.5% slide earlier in Monday’s trading session, the S&P 500 closed 83 basis points higher after President Trump told CBS that the Iran war is “very complete, pretty much.” Since the start of the conflict, the S&P 500 has declined roughly 1.2%.

Oil prices also declined following Trump’s comments to below $90 a barrel. Crude oil prices surged after Israel struck Iranian oil storage sites. On Sunday, the price of oil topped $100 per barrel for the first time since Russia’s 2022 invasion of Ukraine.

READ MORE: IRS releases proposed regs on Trump accounts

A mixed picture of the economy

FACO data shows that advisors’ overall economic outlook has dropped 35% since February. The decline is largely driven by worsening views of the global economic system, which fell to its lowest level since last April, when President Trump first introduced a wide range of so‑called reciprocal tariffs.

Despite the current market impacts, advisors like Tyson Sprick of Caliber Wealth Management in Overland Park, Kansas, note that historically, large conflicts have little impact on long-term returns.

“As tragic and sometimes asinine as global conflict is, the effect on our investments is minimal,” Sprick said in a LinkedIn post. “Your money is fine — go worry about something else today!”

Beyond concerns over the global economic system, FACO data shows that client concerns are one of the leading drivers behind the overall outlook decline.

Advisor assessments of client risk tolerance declined to -21 in March, the lowest figure since last May. Nearly a third of advisors said they expect their clients’ risk tolerance to decrease over the coming months, while 12% expect it to increase and 56% expect it to remain the same.

Some advisors said that their clients are specifically concerned about an AI bubble. Fidelity has said the No. 1 question from advisor clients this year has been about whether or not an AI bubble is forming.

READ MORE: CFP Board launches new ‘Dive’ ad in $27M awareness campaign

Advisors are optimistic about domestic market, policy

Over the next three months, advisors also expect asset allocations to trend more conservative. Expectations around near-term practice performance, meanwhile, remained relatively stable.

On the other hand, advisors were relatively optimistic about the overall economy and government policy over the coming months. Forty-four percent said they expect the economy to grow over the next three months, with 22% expecting it to contract and 34% expecting it to remain constant.

The survey, conducted March 2 to 3, does not capture the impact of the February jobs report, which showed unexpected weakness in the labor market.

Employers cut 92,000 jobs last month, according to the latest figures from the Labor Department, with losses spread across nearly every major sector. The unemployment rate also edged up to 4.4%.

Nearly a third of advisors said that they expect U.S. monetary policy to have a positive impact on their clients’ financial well-being over the next three months, compared to 17% who expect it to have a negative impact and 54% who were neutral.