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.
