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2 in 3 Advisers forced to look beyond traditional equity ‘sources’ to solve income challenge

 

  • Core client base for 86% of advisers were unwilling to change their income levels
  • Two in three (63%) advisers surveyed were forced to think of alternative methods of greater diversification

New[1], dedicated adviser research by Seneca Investment Managers (‘Seneca IM’), highlights two in three advisers (63%) saw their clients take what could be considered a bearish approach with their portfolios [withdraw (27%), withdraw considerably (5%) or not add to their funds (31%)] during and following the lockdown. In contrast, 37% of advisers saw their clients either add to their funds.

Despite the recent investment market challenges, just 14% of advisers saw the lion’s share of their clients willing to reduce their withdrawal rate.

 Yet against this backdrop of consistent income expectations amid a declining quoted market income pool, a resounding 93% of advisers either believe they are well placed (47%), or open to new means (46%) to approach solving the income challenge for clients in the face of widespread dividend cuts and cancellations. This looks beyond traditional equity ‘sources’ to solve an income challenge.

During, and following the lockdown, two in three (63%) of advisers surveyed were forced to consider alternative solutions and greater diversification, further afield from equities, using alternatives and real assets as a means of generating income for clients.

Navigating the alternative investment landscape can be complex, and this is reflected among those advisers who felt more challenged to deliver investors income requirements (7.5%) with a lack of knowledge (87%) and a shortage of research capability (13%) being cited as the biggest barriers.

 Steve Hunter, Head of Business Development at Seneca Investment Managers, comments: “It’s a challenging world out there, and alternative investments  can pose unnecessary risks to clients return objectives if investments are not well understood and allocations not managed appropriately.”

[1] Research commissioned by Seneca Investment Managers was conducted by Censuswide amongst 200 advisers between 01.08.2020 – 07.08.2020

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