Offshore Advisers Report Falling Confidence
Monday, November 28, 2011

A new survey of offshore financial advisors has revealed that the fear of an economic downturn stemming from the eurozone crisis is the major factor hitting investor confidence.

Skandia International's latest quarterly Adviser Confidence Barometer shows that offshore adviser confidence fell 14% in the last quarter, with a third of respondents perceiving global contagion to be the greatest economic threat to their local regions. A combined 40% feel that rising unemployment and inflation levels could have a more imminent detrimental impact.

However, advisers in Asia remain relatively upbeat, according to the survey of over 450 advisers from around the world. The most upbeat on their local economies were Singapore-based advisers, with Skandia assigning a confidence score of 6.7 out of 10, higher than the average score of 5.3.

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.

Another key finding from the survey was that over half of the respondents (55%) reported that their clients have become more risk averse over the past three months, with 47% revealing that their clients are reluctant to invest at all. This is especially the case in Europe, where advisers said that 65% of their clients have a greater aversion to risk, with 61% 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. Skandia suggests that the 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.

On the other hand, the survey found that some investors are looking to take advantage of buying opportunities, with 13% of offshore advisers having reported an increase in the number of clients wanting to make regular investment contributions, whilst 7% saw higher demand for lump sum investments.

One positive finding was that 97% of respondents confirmed that their clients were riding the storm rather than trying to sell their investments and crystallize any losses.

"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" commented Phil Oxenham, marketing manager at Skandia International.

"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, recognizing that successful investing can only be achieved over the longer term," he concluded.