Uncertain market conditions have dented financial planners’ investment outlook: 2020 Adviser Product and Marketing Needs Report

From

Recep Peker

Leading research firm Investment Trends has released its 2020 Adviser Product and Marketing Needs Report, an in-depth study of asset allocation trends among Australia’s financial planners, and their views of asset managers and various investment products.

Key highlights:

  • Uncertain market conditions have dented financial planners’ investment outlook
  • Webinars are increasingly valued by planners in the COVID-19 world
  • Improved retirement income products are highly sought after

Uncertain market conditions have dented financial planners’ investment outlook

The latest Investment Trends research shows that financial planners remain bearish in their outlook despite the recent stock market rebound. As at June 2020, planners expected local shares to deliver capital gains of only 1.3% over the next 12 months – despite the All Ords Index rebounding by over 30% since the March 2020 sell off.

“At the start of the COVID-19 lockdown, financial planners’ capital gain expectations dipped below zero temporarily but had since recovered slightly. 2020 is the first time we observe planners being less optimistic than retail investors in their outlook for domestic stocks,” said Recep Peker, Research Director at Investment Trends.

In response to heightened volatility, planners have most often advised their clients to take a longer term view (63% cite this). But irrespective of their current market sentiment, planners are more likely to advise their clients to invest their excess cash (24%) than reduce exposure to markets (9%).

“Despite their bearish sentiment, planners aim to achieve the best outcomes for their clients – both in the short and long term horizon. To meet their top priorities of diversification (66%), liquidity (38%) and capital growth (37%), planners most often intend to expand their product set and prioritise high quality asset managers,” said Peker.

Webinars are increasingly valued by planners in the COVID-19 world

Whether by choice or circumstance, the pandemic-induced lockdown has impacted how planners communicate and engage with their product providers and technology partners. While email newsletters have traditionally been the most preferred channel for education content (85%), a growing proportion of planners prefer interactive webinars (49%, up from 36% in 2019).

In the last 12 months alone, significantly more planners say they attended a webinar organised by investment product providers (82%, up from 63%), while over a quarter listened to a podcast (27%).

“Planners are increasingly turning to digital channels to engage with product providers, meaning that providers must rethink how their content is most effectively delivered,” said Peker.

“Not only is the delivery channel a key consideration, the content sought by planners must also be on point. For instance, providers can stand out by proactively sharing content received straight from the CIO with their clients.”

Across the industry, planners acknowledge Magellan as the product provider with the most impactful communications. It is most widely recognised as ‘best’ for roadshows, webinars and videos (13% cite this, unprompted), but AMP Capital (10%), Fidelity (10%), Pendal (9%), Perpetual (9%) and Colonial First State (9%) are not far behind.

Improved retirement income products are highly sought after

For financial planners, generating income in this low interest rate environment is their top challenge in servicing retiree clients (66% cite this). Additionally, mitigating market risk (38%, up from 30%) and educating retirees on their finances (19%, up from 16%) are growing issues.

“The twin headwinds of low yields and heightened market volatility have made retirement planning more challenging than ever,” said Peker. “While planners already use a range of retirement income strategies to effectively serve their retiree clients (with income bucketing and a goals-based approach most often used), they still demand more help from product providers.”

When selecting retirement income products, planners are more likely to favour flexible products, especially the ability to access funds when required (56%) and altering income levels (53%).

“To effectively help planners and their retiree clients navigate this low yield environment, it is also essential that product providers satisfy their strong desire for flexibility,” added Peker.

About the report

The results are drawn from the Investment Trends 2020 Adviser Product and Marketing Needs Report, based on an in-depth study of 826 financial planners concluded in June 2020.

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