Americans are running faster and faster toward their financial goals, but many feel like they’re spinning on a hamster wheel.

While some investors said they are comfortable in their jobs and saving for retirement, others think they’re in a losing battle. Across age ranges, roughly 90% of Americans are anxious broader economic forces will impact their long-term financial plans, according to U.S. Bank’s latest wealth survey. Eight in 10 of the 5,000 people surveyed said they feel anxious about stock market fluctuations. The data show a growing confidence gap that will require advisors to emphasize financial education with clients — not solely portfolio management.

“Even if the data suggest you are doing well, it doesn’t feel that way,” U.S. Bank CIO Eric Freedman said at a news conference in New York City last week. “When you start entering into a system like an equity market or the broad investment sphere, that’s where people feel a lot less agency, a lot less control, even though we’re at all-time highs.”

It’s Always Something

The market has been anything but calm this year. Liberation Day tariffs, geopolitical tensions, and weak jobs reports have created volatility, compounding the stress. “People have never had control of the stock market, never had control of the economy,” said Scott Ford, president of wealth management at U.S. Bank. “But it’s just been a lot [of volatility] all at the same time.” The survey found:

• About 20% of Gen Zers and millennials have given up on retirement, along with 25% of Gen Xers and 9% of boomers.

• A quarter of Gen Zers and millennials say they can’t afford to raise children.
• Some 90% of survey participants believe homeownership signals success, but a quarter doubt they’ll ever own a home.

“It’s one thing to cut back on day-to-day finances,” said Sarah Darr, U.S. Bank’s head of financial planning. “But to hear that it is impacting their retirement timeline, their residency … that really speaks to the magnitude of how much these constraints and these economic factors are really taking a toll on them.”

Knowledge is Power. Still, there is optimism. The survey found that financial confidence improves significantly with an advisor, even for clients with less than $50,000 in assets. Freedman said advisors should focus less on chasing high-asset clients and more on education with clients across wealth ranges. “Firms tend to want to be involved with clients with high AUM because of the high margins,” he said. “But focusing more on education empowerment would be important for us as a community.”

All-season tires can be decent in winter conditions, but may not usually be best in a place like Phoenix, where summer tires shine year round.

If the stock market had seasons, it has been (mostly) summer for a long time, and that has made a tough sell for specialty funds that are designed to handle sun, rain and the occasional blizzard. So-called risk-parity funds have struggled to get much attention since just after the 2008 financial crisis — but that may be changing. The very small category of risk-parity ETFs expanded its count by one in March, with the launch of the SPDR Bridgewater All Weather ETF (ALLW). In the long-running bull market, it’s not hard to make a case against risk-parity funds. But it’s harder to make one against Ray Dalio and his massive hedge-fund firm Bridgewater Associates.

“It’s a little bit of a marketing angle, but you can’t really argue against the track record of Bridgewater,” said Dan Sotiroff, senior analyst on Morningstar’s passive strategies team.

New in Town

Among only four US-domiciled risk-parity ETFs on the market, the SPDR Bridgewater fund has quickly become one of the biggest. It now represents $406 million — not a bad start for an ETF that has been available for just over six months. It has returned 6.9%, significantly less than its benchmark, the MSCI ACWI IMI, which is above 12%. But the ETF may be attractive to those who are worried about market dips. The category has done well in those cases, such as the Covid-19 recession and stock market decline in 2022, Sotiroff noted. And as Bloomberg reported on Monday, quant trading is making a comeback, with some risk-parity funds up this year 15% to 19%, a particularly good showing, considering that the strategies are generally intended to replace 60/40 stock-to-bond allocations. The recent strong returns are due in part to fixed income holdings that have served the funds well, the publication noted.

“The end goal of a risk-parity portfolio is not the same as the S&P 500,” Sotiroff said. “It’s trying to be this all-in-one, very long-term solution for an investor.” That strategy has long had to compete with target-date funds, and more recently, with ETF-based model portfolios, he said. Aside from ALLW, there are just three other risk-parity ETFs in the US, according to Morningstar Direct data:

• The $537 million RPAR Risk Parity ETF, which launched in 2019, has returned over 10% this year through August,
• The $60 million UPAR Ultra Risk Parity ETF, launched in 2022, returned 14%.
• The $47 million PMV Adaptive Risk Parity ETF (ARP), which started in 2022, returned 8%.

Fear and Loathing. The timing of ALLW’s launch was spot-on, given the worries investors had following the tariffs the Trump administration announced earlier this year. But investor sentiment has improved, at least according to CNN’s Fear & Greed index, which could mean headwinds are upcoming. “The lack of ETFs in that (risk-parity) space is a byproduct of the long-term performance of these things,” Sotiroff said. “It’s hard for people to stick with them when they see the S&P 500 going higher (and available in ETFs) that I can get for 2 basis points now.”

Like the old saying goes, a good leader knows when to follow.

Integrated Partners’ CEO Paul Saganey may be the founder of the Boston-based RIA and financial planning firm, but he knew when it was time to bring in the reinforcements. “I’ve got amazingly talented people to run the firm, but I spend most of my time coaching advisors and working with our largest clients,” he told Advisor Upside. His newest appointee Andree Mohr — who took over the role of firm president from Saganey last year — handles the day-to-day operations and growth strategies for the company, which was recently recognized as the fastest growing RIA in Massachusetts by CityWire.

Advisor Upside recently sat down with Saganey and Mohr at a busy cafe in New York City to discuss the challenges firms face when trying to grow organically, the consequences of this year’s volatility and how the Great Wealth Transfer is reshaping the advisor space.

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