Financial planners' excess cash holdings skyrocket
Financial advisers are each holding an average $5.4 million in excess cash in client funds that would normally have been invested in growth markets, according to Investment Trends chief operating officer Eric Blewitt.
Excess cash holdings held by planners have grown substantially as investors continue to shy away from volatile markets, he said.
Blewitt said that, in aggregate, planners' excess cash holdings have reached $78 billion, up from $56 billion the previous year.
"Weak capital gains expectations from advisers have further expanded the war chest of excess cash that is held by planners clients," he said.
"Their overall cash holdings are significantly higher than that, but there's about $5.4 million on average per planner across their client base that's sitting on the side and would ordinarily be invested in growth assets if it hadn't been for the recent volatility in markets," he said.
Approximately 90 per cent of planners linked a return to markets with positive investor sentiment, while only half thought that their own advice specifically would be effective in moving cash back into growth assets.
"What they're (advisers) saying is they really need to be able to demonstrate confidence - and confidence needs to be seen in the eyes of their clients for them to be comfortable about going back into the market," Blewitt said.
AUTHOR
Staff Writer
Recommended for you
With the highest number of candidates in a year sitting the latest financial advice exam, a surge of new entrants are expected in the coming weeks, according to Wealth Data.
AMP has launched a range of five diversified index managed portfolios on its North investment platform, targeting a younger client demographic.
An NSW adviser, who advised over 120 clients after falsifying her financial advice exam results, has been permanently banned by ASIC.
ASIC has released the results from the latest financial adviser exam, the first to be run since changes to its structure earlier this year.
