Financial planners hold more in cash and term deposits
Financial planners have continued to steer clear of growth assets while more than doubling their portfolio allocation to term deposits in the past year.
That's according to the 'Investment Trends 2011 Adviser Product Needs Report' which found that 966 financial planners surveyed in October and November 2011 invested 28 per cent of client inflows in cash and term deposits - up from 16 per cent on 2010 results. Flows into term deposits more than doubled from 8 per cent of new money to 17 per cent.
"Excluding dividends, over half of planners now say that their highest priority when choosing where to invest client cash and fixed income allocations is safety from capital loss," said Investment Trends senior analyst Recep Peker.
Cash is still considered a safeguard against the adverse Australian market, with financial planners now expecting the value of the All Ordinaries to increase by just over 8 per cent over 2012, compared to 10 per cent for 2011 and 14 per cent for 2010.
Despite this outlook, the report found that financial planners remain far more optimistic than investors, with market return expectations for planners around 5 per cent compared to 3 per cent for clients.
Where a client's 'excess cash' would normally be invested in growth assets, financial planners estimated investors now hold a combined $3.9 million in excess cash - up 22 per cent from the prior year.
According to the survey, 58 per cent of financial advisers said investment of excess cash would likely be triggered by growing confidence in economic recovery.
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
