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​2017 Trends in Investing Survey shows where financial advisers are 

investing today and where they plan to invest in the coming year

 

DENVER (June 1, 2017) – More than $4 trillion have been invested in Exchange-Traded Funds (ETFs) globally since the first ETF launched in 1993. And according to a new survey by the Financial Planning Association® (FPA®), Longboard Asset Management, and the Journal of Financial Planning, growth in ETF assets will not slow down for the foreseeable future if the financial advisory community has anything to do about it.

 

The 2017 Trends in Investing Survey marks the third consecutive year that ETFs are the preferred investment vehicle among advisers, with 88 percent of financial advisers surveyed currently using or recommending ETFs with their clients—the most popular investment vehicle among 18 options. Since 2006, the survey has shown continued growth in the popularity of ETFs since 2006, when just 40 percent of survey participants indicated they used or recommended ETFs. This percentage grew to 44 percent in 2008, to 79 percent in 2014, to 81 percent in 2015, to 83 percent in 2016, and now 88 percent in 2017.

 

The 2017 survey, which was fielded online in March/April 2017 and received 302 responses by financial advisers of various backgrounds and business models, also indicated that 50 percent of advisers plan to increase their use or recommendation of ETFs with clients over the next 12 months. No other investment vehicle showed this level of anticipated increased usage. For example, 20 percent plan to increase use of mutual funds (non-wrap) and only 19 percent plan to increase use of individual stocks.

 

While ETFs continue to dominate among financial advisers, so does the use and recommendation of cash and cash equivalents. For the first time since the first survey was conducted, cash and equivalents (85 percent) is being used and recommended more than mutual funds (80 percent).

 

"While a buoyant stock market has boosted individual investor sentiment, the rising propensity of financial planners to use or recommend cash and cash equivalents suggests a more cautious attitude on the part of professionals," says Dave Yeske, DBA, CFP®, managing director of Yeske Buie and practitioner editor of the Journal of Financial Planning. "The fact that the bull market in the U.S. is hitting the eight-year mark, against a long run average of less than five, combined with uncertainty overseas, may be causing planners to keep their powder dry, or at least begin considering a more cautious stance."

 

For the first time, the survey also examined the issue of diversification, which revealed that financial advisers are cautiously optimistic about its future. Advisers seem to be split on whether or not what they've used in the past will help their clients achieve their financial goals in the future with nearly 1 in 4 (27 percent) of respondents believing diversification is more difficult today than it has been. And although half of financial planning professionals feel at least somewhat confident that a traditional 60/40 stocks and bonds portfolio can produce the returns it has historically, more than 1 in 3 (36 percent) have doubts that it will.

 

"A growing number of advisers are wondering if it's safe to get back in the water with creeping correlation between stocks and bonds," said Eric Crittenden, Chief Investment Officer of Longboard Asset Management. "But there are ways to get a bigger boat, if you take the time to learn about true diversifiers."

Other key findings from the 2017 Trends in Investing Survey:

  • Despite some (47 percent) advisers indicating they are looking for new ways to diversify a portfolio, most advisers (73 percent) are allocating no more than 10 percent of client portfolios to alternative investments.

  •  Advisers have a more "bullish" short-term outlook today than they did in 2016. The majority (52 percent) of advisers are "bullish" for the next six months, compared to just 26 percent of advisers who were asked this same question in April 2016.

  • Since 2014, an increasing percentage of survey respondents have indicated that the type of management that provides the best overall investment performance (taking into account costs associated with each style) is a blend of active and passive, with 77 percent of advisers surveyed indicating so in 2017, compared to 57 percent in 2014.

     

  • ​Advisers are increasingly re-evaluating the asset allocation strategy they typically recommend/implement due to changes in inflation (40 percent, compared to 28 percent in 2016), and anticipated changes to income taxes (35 percent, compared to 24 percent in 2016), and investment taxes (32 percent, compared to 21 percent in 2016).

​Of those surveyed, 95 percent are Certified Financial Planner™ (CFP®) professionals and 47 percent indicated that they work as an independent IAR/RIA. A full report of The 2017 Trends in Investing Survey is now available HERE and includes additional details and narratives.

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About the Financial Planning Association

The Financial Planning Association® (FPA®) is the principal professional organization for CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals, educators, financial services professionals and students who seek advancement in a growing, dynamic profession. Through a collaborative effort to provide more than 23,000 members with One ConnectionTM to tools and resources for professional development, business success, advocacy and community, FPA is the indispensable force in the advancement of today's CFP® professional. Learn more about FPA at www.OneFPA.org and follow on Twitter at twitter.com/fpassociation.

 

About Longboard Asset Management

Longboard is a strategic partner in alternative investments. Our rigorous approach is built on nearly two decades of original research and development. Longboard investments have historically delivered returns at the top of their categories, and have provided non-correlation to the markets and to other alternatives. Learn more at www.longboardfunds.com.

 

About the Journal of Financial Planning

First published in 1979, the mission of the Journal of Financial Planning is to expand the body of knowledge of the financial planning profession. With monthly feature articles, interviews, columns, and peer-reviewed technical contributions, the Journal's content is dynamic, innovative, thought-provoking, and directly beneficial to financial planners in their work. Learn more at www.FPAJournal.org.​