Nearly half of the 61 advisers surveyed by RLAM were most concerned about the outlook for growth assets; such as equities, commodities and property during 2018, while just over half were most concerned about defensive assets; such as bonds.
Income is undoubtedly important for some, however, the overwhelming majority of respondents said at least half their clients were focused on investing for growth. On average, 72% of an adviser’s clients were predominantly investing for growth.
Just over two thirds of financial advisers currently place client money in passive investments. However, among those that didn’t currently use passive funds or other instruments, only a quarter of these said they would begin to use these over the next 12 months.
On average, just 5% of advised clients had a preference for sustainable or ethical investing. However, one in 10 advisers said that at least a quarter of clients had sustainable requirements.
Mitigate the risk
Phil Reid, head of wholesale at RLAM, said: “With global stock markets touching all-time highs and bond yields still fairly low, many of our recent discussions with advisers have centred around how best to mitigate risk to client portfolios.
“Despite the current shift towards tighter monetary policy, we still think that there are many attractive opportunities available in fixed income, particularly in higher yielding, short duration assets.
“The active passive debate looks set to continue but as the results of this survey indicate, most advisers can see a place for both.
“When it comes to sustainability, the survey results suggest this is still an area for growth within the industry. When we speak to advisers, it’s clear that sustainable investing is becoming a key part of the investment process for many firms.”
When it comes to multi-asset investing, most respondents cited asset allocation and minimising downside risk as areas where they thought that multi asset managers who run model portfolios can add the most value.
When asked about the features they saw as most important in a multi-asset manager, almost a third chose risk management capability as most important, with other popular responses spread fairly evenly among past performance, cost efficiency and a transparent investment process.
Reid added: “The results here are encouraging, with the risk management capabilities of multi-asset teams seen by advisers as vital to deciding where to invest their client’s money. Our research shows that both traditional multi-asset funds and model portfolios still have a role to play in financial planning, most advisers tend to use both, depending on what’s most appropriate for each client.”