Financial planners remain cautious

Financial planner and client sentiment improved marginally in February but remains very fragile amid the expectation of bad news, according to the latest research conducted by Wealth Insights.

The research, contained within the Wealth Insights Financial Planner Sentiment Index, saw sentiment recover from the lows recorded in December and January to a level not seen since around August last year.

However, the February 2012 sentiment index was at minus 66 points - well below the positive 20 points recorded in February last year.

Wealth Insights managing director Vanessa McMahon warned that the recovery in sentiment was fragile and could easily slip back, depending on the tenor of news out of Europe or the US.

"Planners are braced for bad news, they just don't know what it will be," she said.

McMahon said this explained why many financial planners continued to lean to conservative settings such as cash.

On the question of underlying business conditions, financial planners indicated they were in somewhat better shape in February than they were last December.

Asked whether, in their role as a financial planner, times were good or bad right now, there was a significant increase in the number of respondents reporting that times were good.

The Wealth Insights data revealed the number of financial planners reporting times to be good had risen from 12 per cent in December to 29 per cent in February, while 3 per cent of respondents reported times were very good.

There was a minor decrease in the number of financial planners reporting times to be average, and a significant decline in the number of respondents indicating times were bad, from 25 per cent in December to just 14 per cent last month.

McMahon said that while financial planners and their clients remained cautious, the slight improvement in market conditions and sentiment had seen a cautious move back into markets.

However, she said that move back into the markets had proved to be very tentative.