New research has found that fewer financial planners are directly involved in selecting investments for their client portfolios, and that more are looking to model portfolios and managed accounts.
The proportion of advisers directly involved in investment selection fell from 56 per cent to 53 per cent in the last 12 months, with a growing proportion utilising model portfolios, managed accounts and multi-manager funds, according to Investment Trends.
“More planners are choosing to outsource investment selection to focus their time and effort in areas they believe they can deliver more value to clients,” said Investment Trends analyst Viola Wang.
“Our research shows outsourcers perform better in key business metrics compared to those who do not – they typically have significantly larger client books and advise on higher levels of new client inflows.”
The research also found that advisers are increasingly bearish in their outlook for the domestic stock market.
As at July 2019, planners expect local shares to deliver capital gains of just 1.4 per cent over the next 12 months, down significantly from 4.6 per cent in 2018.
Ms Wang said uncertain macro conditions at home and abroad have dented financial planners’ confidence in delivering the appropriate level of risk-adjusted investment returns for their clients.
“Geopolitical risk and share market volatility are the top and growing concerns among planners, with many also keeping an eye on global debt levels and the Australian economy,” she said.
“There is a trend among planners to move from being investment pickers to asset allocators, and more are being nudged in this direction in the post-royal commission environment.
“Once asset allocation is determined, close to half now say they are no longer involved in picking the individual investments.”
The Investment Trends report is based on a survey of 815 advisers concluded in July 2019.
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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