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Portfolio > Alternative Investments

Survey finds optimism high among advisors

By Warren S. Hersch

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More than half of advisors believe the global economy will improve over the next 12 months, new research reveals.

Curian Capital LLC, Denver, released this finding in summary of results from a survey, “2013 Outlook for Advisor Priorities.” The survey polled 2,088 independent financial to gauge how the current economic climate impacts their current investment strategies, future outlook, and perspectives on the issues they face in managing their businesses.

The report reveals that 54 percent of respondents believe the economy will improve in the next 12 months, while 26% are unsure. “Only one-fifth of respondents reported they were pessimistic and believe the economic crisis will be long term,” the report states. “This change in advisor sentiment is striking when compared to the 34% of respondents who said they felt optimistic in December 2011.

Unemployment topped the list of the economic issues that advisors believe are the biggest threats to their clients’ wealth management plans at 23%, followed by government spending at 20%. Three in ten advisors (30%) reported that their clients also feel unemployment is the biggest threat to their wealth management plans, while 14% believe their clients perceive market volatility as the biggest threat.

Declining Social Security benefits ranked as the lowest perceived threat for both advisors and their clients. Nearly 95% of respondents reported they are moderately or very concerned about rising interest rates and the impact this may have on the value of clients’ fixed-income investments; close to 6% were not concerned.

Among the survey’s additional findings:

• More than 87% of respondents said that tax efficiency and after-tax performance are important aspects of the solutions they propose to clients, while nearly 9% said they were not important (4% said they were unsure).

• 63% of advisors also said they have access to and actively use tools and strategies to reduce the impact of taxes on clients’ investment portfolios. However, more than 28% of respondents said they have access to the tools and strategies to help reduce the impact of taxes on clients, but do not

actively use them.

• Nearly 27% of advisors expect to increase their usage of separately managed accounts

(SMAs) this year, while 24% said they expect to increase their usage of alternative investment products. Fixed annuities ranked as the product that advisors were expecting to increase their usage of the least (at 2.5%).

• More than 30% of advisors said they have 10% or more of their assets under management allocated to alternatives.

• More than 31% of advisors report that they plan to increase their usage of alternative investments this year by 5-10%, and one-fifth of advisors plan to increase their usage by 10-15%.

• 57% of advisors use multi-strategy open-end mutual funds, and 38% of advisors use single-strategy open-end mutual funds, to gain access or exposure to alternative asset classes.

• The vast majority of advisors (83%) reported that they have access to adequate investment products to meet their clients’ retirement income needs.

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