Advised investors have ‘significant advantage'

17 December 2018

Advised investors enjoy higher returns, have more balanced portfolios, and a significant advantage over non-advised investors, according to Legg Mason’s 2018 Global Investment Survey.

The survey, which was conducted across 17 markets worldwide, and involved just under 17,000 investors, showed the benefits of professional advice in helping investors to generate long-term returns and manage downside risk. 

Managing director, Australia and New Zealand, Andy Sowerby, said advised investors reaped an average 1.5 per cent per annum higher return from income-focussed portfolios, driven by better portfolio construction and lower cash holdings.

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“Our survey shows that advised investors typically have more balanced portfolios with less exposure to cash and equities but greater holdings in fixed income and alternatives,” he said.

The survey found that advised investors were more invested and had lower cash savings than their do-it-yourself (DIY) counterparts (25 per cent compared with 34 per cent) and lower equities allocations (23 per cent compared with 29 per cent).

As well, 18 per cent of advised investors have higher allocations to fixed income as compared to 10 per cent of DIY investors.

Advised investors also tend to use differentiated asset classes like alternatives, and have a more global approach to investing.

“Our research goes on to show that advised investors are more open to new ways of investing,” said Sowerby. “In addition, they tend to have clear long-term goals due to having a financial plan that is allied to the personal risk profiling undertaken.

This planning helps to ensure that advised investors stay invested through volatile periods rather than being jolted out of their investments due to short term market turbulence”.

Sowerby also said investors working with advisers were more confident in their approach, more sure of their investment knowledge and more excited.

The survey also showed that investors were most concerned about professional qualifications or experience and transparency around fees when looking for an adviser.



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