Financial planners and investors stay cautious

Australian investor sentiment has hit one of its lowest points, according to the latest Wealth Insights Investor Sentiment Index.

Associated research by Wealth Insights has also revealed that a significant proportion of financial planners are actually urging their clients to more conservative investment settings.

The Wealth Insights Investor Sentiment Index, based on a survey process traversing the past 14 months, has revealed the degree to which Australian investors who are financial planner clients have retreated over the period.

In particular, the index reveals the manner in which the optimism which was evident in the early months of 2011 evaporated and reached a low point in September, and had barely improved by December.

Wealth Insights managing director Vanessa McMahon said the index seemed to reflect the volume of adverse news emanating out of Europe and the US.

"With news headlines that focus on volatile markets, Europe's debt crisis and a possible second global financial crisis, it is no wonder that investors currently lack confidence," she said.

Other Wealth Insights research revealed the degree to which financial advisers themselves had reacted to the volatile market conditions and the manner in which this was reflected in the investment advice provided to clients.

McMahon said the data revealed there had been a general retreat on the part of financial advisers in terms of their clients' exposure to markets.

As well, the data revealed that while financial advisers placed an average of 35 per cent of client investments in cash and fixed interest, those advisers with high-net-worth clients were likely to place significantly more into this asset class.