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17/11

Adviser confidence cools in Q4 but belief in local economies prevails

Offshore financial adviser confidence drops by 14% in Q4 2011 although advisers in Asia remain relatively upbeat, according to Skandia's International's Adviser Confidence Barometer research.

17 November 2011

Offshore financial adviser confidence drops by 14% in Q4 2011 although advisers in Asia remain relatively upbeat, according to Skandia's International's Adviser Confidence Barometer research.

Adviser’s confidence levels in their local economies scored 5.3 out of 10 – down from last quarter’s 6.2, whilst the consensus on the global economy dropped from 5.4 out of 10 to an average of 5.

The most upbeat on their local economies were Singapore based advisers with a score of 6.7, whilst advisers in the UK displayed the greatest nervousness with a below average score of 4.6. In fact, respondents from the UK were the only ones to consider the outlook for the global economy as more positive than the shape of their local market; all of the other surveyed advisers displayed a stronger bias towards their local economies.

Just like last quarter, a third of offshore advisers fear global contagion to be the greatest economic threat to their local regions, whilst a combined 40% feel that rising unemployment and inflation levels could have a more imminent detrimental impact.

As many as 55% of advisers – up from 37% last quarter, feel their clients have become more risk averse over the past three months, whilst 47% reported a reluctance on their clients’ part to invest at all. The ongoing Eurozone crisis seems to be taking its toll on investors locally, with 65% of European advisers believing their clients had become more risk averse over the quarter and 61% stating their clients were unwilling to invest at all.

Only 4% of respondents felt that their clients may be prepared to take more investment risk, significantly down from 17% last quarter. The uncertain economic outlook, coupled with the increased volatility in stock markets around the globe, may explain why half of all surveyed advisers stated their clients chose to invest less during the last quarter.

However, some investors are looking to take advantage of buying opportunities. 13% of offshore advisers reported an increase in the number of clients wanting to make regular investment contributions, whilst 7% saw higher demand for lump sum investments. Perhaps the most significant encouraging finding was that the vast majority - 97% of respondents, confirmed that their clients were riding the storm rather than trying to sell their investments and crystallise any losses.

Phil OxenhamPhil Oxenham, marketing manager at Skandia International comments:

‘This last temperature check was only taken a few weeks ago, when markets were exceptionally volatile. Whilst it looks like the economic uncertainty is set to continue for some time yet, it is encouraging to see advisers’ confidence in their local economies remaining relatively positive. The fact that the vast majority of clients are waiting for the storm to pass rather than giving in and selling their investments shows that investors, with support from their advisers, are taking a pragmatic approach, recognising that successful investing can only be achieved over the longer term'.

*The Offshore Adviser Confidence Barometer research was conducted by Skandia International in Q4 2011 and attracted responses from over 450 advisers from around the world – Hong Kong, Singapore, Dubai, UK, Europe, Africa and Latin America.

This press release is for journalists only and should not be relied upon by financial advisers or customers.