Financial advisers from around the world are, on average, more confident about the global economy than they were in Q4 2011, according to Skandia International’s latest Adviser Confidence Barometer*. Overall, confidence has risen by 10% from an average of 5 to 5.5 out of 10. The survey also indicates advisers are slightly more upbeat about their local economies with confidence levels increasing from 5.3 to 5.6 over the last quarter.
Financial advisers in Asia remain the most confident in their local economies with an average score of 6.6, with respondents from both Hong Kong and Singapore having the most positive outlook, reporting a confidence level of 6.7 out of 10.
Adviser’s confidence in their local economies has seen a rise in all regions other than Europe, where ongoing uncertainty around the debt crisis has seen confidence levels fall to an average of 4.4, from 4.6 in Q4 2011. This is in stark contrast to their outlook on the global economy where respondents from Europe exhibited the highest confidence score at 5.7 out of 10, representing an increase of 8% since the previous survey. In fact, of all the advisers surveyed only those from Europe and the UK had more confidence in the global economy than their own.
Over two thirds of financial advisers surveyed believe that the European debt crisis is the biggest threat to their local region, this in contrast to the previous two quarters where global contagion was seen as the biggest potential issue. Unemployment was selected as the second biggest threat by advisers with 36% believing this may negatively impact their local region.
Confidence in investment sectors seems to broadly mirror the advisers’ confidence in their local economies with nearly a third saying that emerging market equities and emerging Asia equities are the sectors most likely to offer the best investment returns over the next 12 months. Less than 1% of advisers believe that European equities (ex UK) will offer favourable returns, which reflects the unease about the current crisis in Europe – despite the strong run seen by European equities (ex UK) during the first three months of this year, returning 9.75%** over that period. However, UK fixed interest was the least popular investment sector for advisers with just 0.4% selecting it to provide the most profitable returns over the next year.
Phil Oxenham, marketing manager at Skandia International comments:
“The European debt crisis continues to have a significant impact on adviser sentiment. The findings of this survey clearly show that financial advisers globally are concerned about the continued effects of this on their own regions. This is reflected in the advisers’ choices of where to recommend investments during the next 12 months, as European equities remain very unpopular. The selection of emerging Asia equities and other emerging markets equities as the sectors likely to offer the best returns over the next year demonstrates the wide spread belief that emerging markets offer the best potential for investment areas – although these are also likely to be more volatile. As always, it is important that investors select a balanced portfolio of assets and sectors that is aligned with their individual risk profile.”
*The offshore adviser confidence barometer was conducted by Skandia International in Q1 2012 and attracted responses from 445 advisers from around the world – Hong Kong, Singapore, Dubai, UK, Europe, Africa and Latin America.
** Source: FinEx Analytics, 31.12.2011 – 31.03.2012 in EUR.