Asset allocation changes ignored by financial advisers
Thirty-eight per cent of independent financial asvisors in the UK have not changed their asset allocation in the wake of the recession, despite massive losses on client assets.
According to research conducted by financial adviser MetLife Europe, nearly 40% of IFAs have not responded to volatility by changing asset allocations. The survey showed on average an IFA will spend 11% of their time on asset allocation.
For those that say they have changed, advisers are split on how to adapt. Fourteen per cent say they have switched to index fund dominated models while 48% say they have moved to active fund dominated models.
Clients are increasingly switching away from high equity content in their portfolios, with 57% of advisers saying they have seen clients switch out of equities with a quarter saying the majority of their clients have turned their backs on high equity content in their portfolios.
Dominic Grinstead, UK Managing Director, MetLife, says: “It is clear that recent volatility has piled the pressure on IFAs, and advisers have to adapt in order to offer the best advice. Asset allocation has to adapt in the current investment climate given the unprecedented volatility and with the drift of the FTSE-100, clients are increasingly losing faith in a pure equity approach."
Nearly 10% of advisers said they use model portfolios for their client base while 59% rely purely on individual advice with 29% using a mix of both.
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