Advisers more likely to recommend growth than income products

Written by Oliver Wade

The number of advisers’ clients choosing growth as their main priority when selecting an investment product has increased, rising from 28% in January 2018 to 37% in April 2018, according to figures from NS&I’s latest edition of its Financial Advice Barometer.

Furthermore, the Barometer revealed that security remained the top priority for a majority of clients, with 55% of respondents claiming it was most important. However, there has been a decline in the number of clients that previously cited regular and consistent returns as their highest priority, falling from 14% in January to just 4% in April.

NS&I found that fixed-term products are the most frequently recommended cash deposit product, despite their popularity being on the decline since October 2016. Shorted fixed-term options have become more of a priority for advisers and their clients since January, with this quarters data illustrating that two-year fixed-term products have increased in popularity from 26% in January to 30%.

Five-year fixed-term products have declined severely in popularity, falling from 3% to 0%. One-year fixed products have continued to be the most popular option to recommend overall, with 57% of clients choosing them as their top priority in both January and April.

Almost 100% of advisers (99%) either include cash in their holistic financial planning process, or provide the guidance for clients to invest in cash deposits themselves. The number of advisers who claimed to not discuss cash with their clients has fallen from 3% in January to 0% in April.

Additionally, over 50% of advisers are now advising clients to invest more in NS&I due to the FSCS limit of £85,000, whereas NS&I promise a 100% security guarantee which is supported by HM Treasury.

Premium Bonds are still a popular product among adviser recommendations, coming fourth after fixed-term (79%), easy access (77%) and cash ISAs (75%). Three quarters (73%) of financial advisers frequently recommend Premium Bonds to their clients, an increase of nine percentage points from 64% in January 2018.

NS&I head of intermediary relations Andrew Pike said: “Cash now appears to be close to an automatic talking point when it comes to discussions between advisers and their clients, and indeed part of the holistic financial planning process in many cases. Our latest research shows that not a single adviser said that they did not discuss cash deposits with their clients, while there seems to be a change in priorities in recommending growth products over income all the while making sure clients’ money remains safe.”

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