Adviser optimism to drive asset allcoation in 2014 – BlackRock
Asset allocation strategies will undergo a significant overhaul in 2014 with UK, German and Italian financial advisers overwhelmingly positive about the three year outlook for financial markets, according to research by BlackRock.
The BlackRock Investor Pulse survey was conducted in conjunction with independent research group Cicero Group during August and September 2013 among 17,600 people aged between 25 and 74 across 12 countries, including 2,000 in the UK, 2,000 in Germany and 2,000 in Italy
The suvery revealed that 91% of UK advisers are optimistic about the outlook for financial markets over the next three years. The figure compares favourably to key European markets, with 87% of Italian advisers and 81% German advisers sharing this optimism, and reflecting a return of confidence to markets.
Equities in favour
As the research also showed, advisers’ positivity is shown in their future asset allocation approach. Significant movement into equities can be expected next year – a quarter (26%) of UK advisers will encourage clients to make this move a tactic echoed by 28% of German advisers. Currently, UK advisers allocate almost twice (45%) as much client money to equities as German and Italian advisers (26% and 23% respectively).
Diversifying portfolios with multi-assets
Two in five German and Italian advisers are urging clients to diversify by increasing their exposure to multi-asset solutions, reflecting an increasing demand from investors for outcome-oriented multi-asset solutions. A fifth of UK advisers are also looking to enhance investments in multi-asset and index products over the coming year; and emerging markets look set to shine in Italy where they are favoured by a third of advisers (31%).
Alex Hoctor-Duncan, head of Retail for Europe, Middle East and Africa, at BlackRock, commented: “It is very encouraging to see such optimism from advisers about their outlook for financial markets over the next three years. As they review their clients’ asset allocations for 2014, the survey reveals there is likely to be a significant shift in portfolios as advisers look to help their clients take steps out of cash and seek simple investment solutions, which have a greater focus on the ‘outcome’, to help deliver their clients’ longer term investment goals.”
Increased risk appetite?
Risk appetite amongst German and UK clients has grown in the last 12 months according to financial advisers. In Germany, nearly half (47%) of advisers believe their clients have become less risk averse, a trend that is also seen by a third of UK advisers. Conversely, when talking directly to investors in The BlackRock Investor Pulse Survey, over half in each of the three countries claim they are unwilling to take any risks with their money, emphasizing the benefits advisers can provide by helping clients navigate the investment landscape.