Advisors are feeling frisky heading into the back half of 2025.

The vast majority of financial advisors — along with some prominent analysts — are calling for a significant market runup in the remaining two quarters of the year. More than two-thirds of advisors said they expect the S&P 500 to advance 10% or more by year-end compared with May lows, according to an InspereX survey of 829 financial advisors released last week. While a quarter of those advisors expected the index to finish flat, just 8% are expecting a pullback. FactSet analysts are now projecting S&P 500 companies will grow earnings by 9% this year, and while that is significantly lower than the 15% projected back in January, it will probably be enough to ward off a bear market, said Michael Arone, chief investment strategist at State Street Global Advisors.

“The uncertainty that roiled markets complicates decision-making,” Arone told Advisor Upside. “But the increased volatility in the first half of the year has created an opportunity for investors to make adjustments to better position portfolios.”

You’re Saying There’s a Chance?

Sure, tariffs wreaked havoc in the first quarter, but the Trump administration’s pivot has been a boon for the market since, and helped the sky-high valuations of mega-cap tech companies come back to reality. Another plus could be the Fed resuming its rate-cutting cycle later this summer, Arone said. “After a challenging first quarter for stock market performance, valuations are in a much better place,” he said. “Investors are in the uncomfortable position of waiting and seeing across multiple dimensions over the next few quarters.”

Then, there’s the fun fact that Barack Obama, Trump 1.0, and Joe Biden also suffered early volatility in their first 100 days in office, ahead of significant rallies. Historically, the first year of the presidential cycle is the strongest, Arone said. “All of this supports financial advisors’ belief that the S&P 500 will be up by 10% at the end of the year,” he said. The InspereX survey found advisors may be leaning toward risk-on investments:

• Nearly half (49%) of advisors said equities will be the best performers of 2025, followed by gold in a distant second place, then cryptocurrencies.
• The most volatile assets through yearend are expected to be equities (44%) and, of course, crypto (36%).

Don’t Chase AI. For advisors looking to reinforce portfolios, Arone suggested high-quality companies with stable earnings, balance sheets and dividends. They may also want to revisit portfolio allocations to international and emerging markets stocks — especially if they haven’t owned them in a while.

But, while the tried-and-true AI companies were all the rage in recent quarters, their massive technology investments probably won’t benefit clients that invest in them today. “Look towards tech companies that will benefit from AI capex spending at better valuations,” he said.

They do give a darn about their good reputations.

Vanguard, Goldman Sachs, Morgan Stanley and more, are among the asset managers held in the highest esteem by advisors, according to a recent survey from Fuse Research, and they have strong incentives to maintain that status.

Reputation is a critical differentiator for asset managers, particularly in a saturated market: It’s one of the top factors that advisors consider when crafting a financial strategy for clients, said Mike Evans, author of the report. At the foundation of an asset manager’s reputation is its products. If a company’s funds perform well and are cost effective, advisors will hold them in high regard. Relationships with sales teams and a firm’s marketing efforts, however, greatly influence advisors’ attitudes, too.

“Those are the three pillars that will create the overall perception for advisors,” Evans said.

Good Working Relationship

Sales people are the first line of contact for an asset manager, and the best ones can create long-lasting relationships with advisors through in-person meetings as well as regular emails and phone calls, Evans said. Additionally, an asset manager’s reputation is influenced by its thought leadership and marketing capabilities: Is the firm creating ads and putting out insightful information that speaks to advisors’ needs? For example, advisors ranked American Funds/Capital Group as one of the top firms for its robust email marketing, LinkedIn presence, and website content.

The Fuse report broke down asset managers’ reputation by firm size, specifically the AUMs of their ETF and mutual fund offerings:

• When it comes to mega firms (more than $200 billion in AUM), advisors said American Funds/Capital Group and Vanguard had the best reputations.
• For large firms (between $75 billion and $200 billion in AUM) the top distinctions went to First Trust and Goldman Sachs.
• And for mid-size firms (between $10 billion and $75 billion), advisors had a preference for Morgan Stanley and Russell. The former is one of the most recognized brands in finance, and the latter’s wholesalers team consistently wins good reviews, Evans said.

The asset management industry can get rather saturated with funds that have similar fees, strategies, and returns, Evans said, so marketing and customer service can be big differentiators. “Branding is certainly very important,” he said.

Americans are taking a page from the FIRE movement’s playbook.

Fidelity’s retirement analysis from Q1 2025 showed that more US workers may be able to achieve the group’s dual goals of financial independence and retiring early. Although IRA, 401(k), and 403(b) balances were lower due to this spring’s stock market swings, contribution rates increased. The report found that the combined 403(b) savings rate for employees and employers held steady at 11.8%, while the 401(k) savings rate grew to 14.3% — the highest figure ever recorded by the asset manager. IRA contributions rose 4.5% from last year.

The findings, based on analysis of 50 million retirement accounts, have implications for how advisors should think about their clients’ retirement plans. “More people are putting more money away, which is great, but I think a lot of them are putting it in the wrong place, in a 401(k) rather than a Roth,” said CPA and retirement expert Ed Slott. While 401(k)s allow workers to contribute pre-tax income, the funds are subject to taxation when withdrawn; Roth funds are taxed beforehand. Savers who contribute to a 401(k) “are building up a future tax bill in retirement,” he said.

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