Litany of woes piled up high enough to push the high cost of energy aside. RIAs' confidence in the U.S. economy and stock fell to a brand new all-time low in January, according to Advisorbenchmarking, whose Advisor Confidence Index (ACI) declined 6% 92.48 from 98.87 in December.

"The convergence of the sub-prime collapse, credit crises, real-estate fall, consumer overspending, worldwide financial issues and totally uncertain political -- and thus tax-law -- outcomes are combining to |image1| create a 'perfect storm' of financial woes," said Peter Wheeler of San Diego-based Wheeler/Frost Associates.

Wheeler submitted this comment with his January ACI questionnaire. Advisorbenchmarking conducts its monthly survey of independent RIAs in the first half of every month. So it conveys sentiments and views that are several weeks old by the time they're released.

Three of the ACI's four components declined this month.

ACI components January 2008

Current economic outlook

-9.97% Six-month economic outlook -11.52% 12-month economic outlook +5.25% Stock-market outlook -10.09%

The glimmer of hope for the economy beyond the six-month view, was reflected in some advisor's comments.

If and when

"Expect a weak economy and stock market for the first half of the year," said Jim Elder of Montrose, Colo.-based ElderAdo Financial. "Then as the financial industry woes subside and interest rate cuts begin to take effect we should see a gradual improvement."

And Bill Ramsay of Financial Symmetry in Raleigh, N.C., saw healing on the way as dollar LIBOR starts to track other dollar rates so that "lower mortgage rates should be coming. This will help to stabilize the housing market, though there is still more pain to come as the lower rates will not rescue those who cannot afford their payments and those underwater on their mortgages."

But James Dailey, of Harrisburg, Pa.-based TEAM Financial Managers, sees a growing sense that that they credit crisis goes well past the sub-prime mortgage market as the prelude to "the second stage of a bear market. Denial had been the first stage and we are now in the migration phase. Eventually, we will reach the panic phase, though it is still too early to try and assess when that will arrive. Return of capital remains far more important than return on capital."

Advisorbenchmarking is an affiliate of Rydex Investments.-FWR

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