One in five (19%) independent financial advisers (IFAs) expect an increase in their clients moving money from investments to cash savings, according to research and insight agency Opinium’s latest IFA Barometer. This is due to increased volatility within the market, with levels of uncertainty running high across the global economy.
Overall, four in five (81%) IFAs expect investments to be more volatile in the next twelve months compared to the last. Of those who predict this rise, almost half (44%) expect investments to be much more volatile. This compares to only 4% of IFAs who expect the market to be less volatile.
This data comes as the global economy is shaken by trade tariffs set by the US – with three in four (73%) IFAs noting concern about geopolitical environment. This represents the top concern for IFAs when considering what will impact investments.
The movement of money from investments to cash savings may be indicative of a wider shift away from risk as uncertainty in the market increases. Should investments become more volatile, half (48%) said they would take a longer-term approach to investment, while a third (34%) said the total amount invested would decrease.
However, despite the challenges associated with increased market instability, the end effect on advisers may not be all negative: half (50%) of those who expect an increase in volatility expect their clients to seek out their advice. Additionally, three in five (57%) expect investors to become more engaged should market uncertainty increase.
Alexa Nightingale, Global Head of Financial Services research at Opinium, commented: “Due to the current instability seen in the global market, many IFAs foresee their clients moving money away from investments towards cash savings to protect their portfolios. This shift would highlight a growing caution, as people rethink their willingness to take risks in light of concerns like geopolitical tension, inflation and fluctuating interest rates. While cash savings can provide safety and easy access to funds, they often offer lower returns, so IFAs will need to advise their clients on finding a balance between security and the chance for growth in today’s changing market.”
