IFAs hold investor’s asset allocations steady during pandemic

Seventy-two per cent of independent financial advisers have left their clients’ asset allocations the same throughout the volatility caused by coronavirus.

Research from Canada Life Asset Management revealed that only 14% of advisers have taken steps to reduce their clients’ exposure to riskier assets – such as emerging market equity or high-yield bonds.

Canada Life suggested this long-term view is being mirrored by their clients’ investment goals, which have also largely stayed the same.

The study, based on responses from 200 independent financial advisers, did however reveal that client trepidation is growing with 63% of advisers saying their clients have become more fearful of volatility since the start of the year, and more than half (54%) reporting increasing concern about investment risk.

The research indicated that advisers are also becoming increasingly concerned about the chances of reaching their clients’ investment goals – particularly in the case of clients over 50 years old as they get closer to retirement.

Canada Life Asset Management head of strategic alliances, Craig Metcalf, commented: “Advisers have long memories and are adept at keeping their cool, adopting a longer-term view as they have likely navigated clients through previous market turmoil, including 2008 and the dot.com bubble.

“However, for some of their clients the pandemic has spooked them and many say they are feeling apprehensive or concerned about the safety of their investments and their likelihood of reaching their goals.

“As we navigate the next few weeks and look towards 2021, advisers will be making decisions to ensure their clients’ risk of exposure to markets, both upside and downside, is factored in. By adopting diverse, multi-asset strategies advisers will be positioning their clients well for future volatility.”

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