Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Annuities > Fixed Annuities

Advisors’ ETF Use Jumps, Annuity Use Slumps: FPA

Your article was successfully shared with the contacts you provided.

Just as advisors’ use of exchange-traded funds continues to rise, advisors are shying away from annuities, according to the Financial Planning Association’s 2014 Trends and Investing survey.

They survey, conducted by the Financial Planning Association’s Journal of Financial Planning and the FPA Research and Practice Institute, found that more than 79% of advisors are using and recommending ETFs today versus 40% in 2006.

The survey also found that 39% of advisors plan to increase their use of ETFs over the next 12 months — the highest anticipated increase among 17 investment vehicles.

However, the survey of 288 advisors of various backgrounds, conducted in March, found that only 41% of advisors currently use or recommend variable annuities, compared with a high of 58% in both 2006 and 2008. Twenty-nine percent of planners surveyed say they are currently using or recommending fixed annuities for clients, down from a high of 49% in 2010.

Advisors’ long-term economic outlook is positive, according to the survey, with 57% “bullish” for the next five years, compared with just 39% who are bullish over the next six months.

Survey results also indicate an overall increased use of cash and equivalents since 2006, when just 53% of planners surveyed were using or recommending cash, compared with 79% today.

“The study seems to point to a shift toward investments with greater transparency and liquidity,” says Valerie Porter, director of the FPA Research and Practice Institute. “Perhaps advisors are responding to consumers’ demand for lower cost investments that allow them to be more nimble in their investment approach. And I think it’s safe to say everyone values cash a little more since last decade’s market collapse.”

Other key survey findings include:

  • While 50% of advisors indicate that they do not plan to decrease the use or recommendation of any investment vehicles in the next year, 15% will decrease use of individual bonds, and 16% will decrease use of non-wrap mutual funds.
  • Although the majority of advisors (57%) believe a blend of active and passive management provides the best overall investment performance (taking into account costs associated with each style), more advisors are likely to have increased their use of passively managed funds over the last year (30%), then actively managed funds (18%).

Check out Want to Add 130 Bps to Your Clients’ 401(k) Returns? Educate Them on ThinkAdvisor.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.