"We're seeing 2013 as being two half years," says the chief investment officer of Fifth Third's investment group. "The first half will be a resolution of the fiscal cliff, with spending cuts and rising taxes that will create a drag on the economy. The second half will have more traction." And as that second half unfolds, a number of financial pundits say that banks and bank advisors will feel several effects, including increasing pressure to segment their client base; nurture client relationships as they climb the economic ladder; focus on their online efforts; and the need to be offensive.
Systems Are a Go... Mostly
Reynolds says the fiscal drama is likely to slow down the economy for the first two quarters of 2013. However, the uncertainty that plagued the early half of 2012-such as worry over an economic implosion in Europe-has simmered. Plus, China and other emerging markets are expected to pick up this year, which should help the economy here as well, supporting his fairly strong view on 2013's close.
Reynolds is hardly alone. Housing prices, an uptick in manufacturing and even potential stability within the European markets are all helping advisors and analysts view the coming year as one with a gentle but solid lift on the horizon. And that stabilization is likely to bring a renewed interest in the markets.
Advisors certainly hope so. Today many are redoubling their efforts to be available to clients while also looking for ways to engage new prospects.
Banks are exploring new avenues to attract prospects from online services to hybrid models, while also making sure they can serve new and current clients by looking at their specific needs-whether they are high-net-worth or mass affluent. They're also looking to ensure that their own practices stay strong, which will likely include a heightened focus on succession planning.
At Fifth Third these priorities are met with a commitment to education-for both advisors and clients-that utilizes various methods including online videos to help advisors stay on top of the expected changes in the economy in 2013. Plans also call for clients to have more access to data on the firm, says Phil McHugh, executive vice president and head of investment advisors for the bank.
Also on the road map: More emphasis on wealth planning-not just in planning clients' financial future, but also a continued presence to help them reach their goals.
And investors have reasons to financially push themselves again. Economic numbers look good (or at least stable) on many fronts. Existing home sales were modestly up toward the end of 2012-a 2.1% increase from September's 4.69 million to October's 4.79 million, according to the National Association of Realtors. Consumer confidence is also holding steady, according to the business group Conference Board, which put its Consumer Confidence Index at 73.7 in November, up from 73.1 in October. And while unemployment stood at 7.9% in October 2012, these numbers have steadily come down from their height of 9.9% in April 2010, according to the U.S. Bureau of Labor Statistics.
The central banks have helped stabilize global economic uncertainty, from the European Central Bank to the Federal Reserve, notes Reynolds. "Monetary authorities are stepping in, not only providing a floor, but also promoting asset price appreciation, including stocks and real estate," he says.
Housing numbers in particular are portending a potentially strong 2013, says Jim Swanson, chief investment strategist and portfolio manager for MFS, who notes that home building could reach 3.5% of GDP by the end of next year, up from 2.5% today.
While Swanson says that's short of the nation's 50-year average of 4.5%, he believes that the increase could ripple across the entire economy- enough to potentially offset the fiscal cliff effects from the close of 2012.
"Since the peak we've lost 1.8 million houses," Swanson says, explaining his slightly bullish eye on the housing market.
Jeffrey Saut, the chief investment strategist at Raymond James, is also watching as real estate and housing numbers grow stronger. To him housing and jobs go hand-in-hand-and both offer strong investment options, if investors know where to look. "Twenty-two million kids who have graduated from school are living with their parents and now they have jobs," says the St. Petersburg, Fla.- based Saut, who has watched as home building has jump-started again in his own home town, a harbinger, he says, to more job recovery. "And with every house you build, you create three jobs."