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 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.