Advisers turning to cash, fixed income: Data

Financial advisers are increasingly leaning towards cash and fixed income, making up 15% of new client inflows this year, according to Investment Trends.

The 2023 Adviser Product and Marketing Needs report revealed that one in four advisers recognise the significant impact of yield considerations and recessionary fears when shaping their portfolio construction strategies.

What's more, it found that 24% of advisers are planning to boost their allocation to cash and fixed income in the next 12 months, reaching the highest level in three years.

One in five advisers aim to diversify their product usage, with ETFs and managed accounts being the preferred choices.

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"With the backdrop of the most accelerated rate hike cycle in recent history (domestically and in most OECD countries), the pendulum has certainly fully swung the other way, reigniting demand for cash and fixed income as asset classes of choice," Investment Trends head of research Irene Guiamatsia said.

Elsewhere, the report said advisers are becoming more selective in choosing product providers for their clients, focusing on factors like performance, cost, and active management expertise.

While the manager's investment philosophy remains the primary factor, Guiamatsia emphasised that advisers are now scrutinising both performance and fees more closely.

On the flip side, it underscored that inadequate performance and a lack of trust are key reasons for advisers discontinuing relationships with fund managers.

Advisers are also advocating for a revival of traditional engagement models, favouring business development manager (BDM) visits, and in-person events like roadshows and conferences.

"Advisers tell us they currently receive more contact from product issuers than they would like," Guiamatsia said.

"While this is the expected outcome of a wide (and growing) product range, it certainly underscores the need to make each interaction with advisers count."

The Investment Trends 2023 Adviser Product and Marketing Needs report is based on a survey of 1276 financial advisers conducted from June to July. This marks its 16th iteration.