Recently released, the 2012 Investment Trends Adviser Product & Marketing Needs Report examines Australian financial planners and their investment product needs, including cash, managed funds and ETFs.
Weak capital gain expectations have further expanded the war-chest of excess cash held by planners’ clients
- The proportion of planner flows into cash is at record levels (31%, up from 28% in 2011).
- In the year to September 2012, the average planner estimates their client base to have $5.4m (up from $3.9m in 2011) sitting in ‘excess cash’, or funds that would normally have been invested in growth assets but haven’t as a result of the volatility. This aggregates to planners collectively holding $78bn in excess cash, up from $56bn in 2011.
- Commenting on the recent research Chief Operating Officer Eric Blewitt said that “volatility in markets at home and abroad has lead planners to revise their market return expectations downward. Financial planners now expect the value of the All Ordinaries to increase by just 7% over 2013, versus 8% for 2012 and 10% for 2011.”
However, planners remain more optimistic than investors, with their market return expectations only hovering at 3% for 2013.
The decline in flows to managed funds appears to be bottoming out
- Planners invested 41% of client flows in managed funds in 2012, down from 46% in 2011, and 52% in 2010. They expect inflows to settle at 40% by 2015 with a greater allocation to direct listed investments (31%).
Inflows to offshore assets remain steady, however appetite has swung away from Asian and Emerging Markets towards the US/North America
- Inflows to international assets remain steady at 26% of client inflows, despite last year advisers expecting this to increase to 29%. “This is not surprising given the uncertainty in overseas markets”, said Mr Blewitt. “Home bias alongside factors pertaining to uncertainty in market performance and currency movements seems to be deterring planners from higher levels of international investment.”
- However, adviser appetite has swung away from Asian and Emerging Markets towards the US/North America. Among those planning to recommend international investments to their clients, 28% would encourage their clients to invest in the US/North America region in the next 12 months, up from 21% compared to the year prior.
- International funds covering multiple regions remain the most popular recommendation from planners to clients intending to obtain international diversification for their portfolios (49%, down from 57% in 2011).
Vanguard ranks 1st in overall adviser satisfaction
When assessing satisfaction with the fund manager planners use the most, Vanguard leads the market.
The top 5 fund managers are as follows:
1st Vanguard
2nd Dimensional
3rd AMP Capital Investors
4th Colonial First State
5th MLC
About the report
Based on an in-depth survey of 822 financial planners in July through to September 2012, the 2012 Investment Trends Adviser Product & Marketing Needs Report is the fifth iteration of a wide-ranging analysis of Australian financial planners’ attitudes and investment product needs.