Margin lending on advisers’ radars
Financial adviser interest in the margin lending market has skyrocketed, with seven out of 10 advisers increasing their use of gearing with clients in the past 12 months, an industry report has revealed.
According to the Investment Trends/Colonial Geared Investments Margin Lending Report, use of gearing has more than doubled for the market.
Investment Trends director Mark Johnston said of the more than 350 financial planners surveyed for the report, more than two-thirds had increased their use of gearing with clients during 2006.
“The single largest driver was an increase in client education and understanding of gearing. Margin lending also increased its lead as the preferred form of leverage among planners who advise on gearing strategies, with 52 per cent saying this was their most recommended form of gearing,” Johnston said.
The report also found increased awareness and understanding of margin loans had resulted in both a growth in the volume of new loans and their average starting value, with the median new loan size up 12 per cent during the last 12 months.
“In terms of asset classes, planners cited ongoing support for Australian equities over 2007 and very strong interest in Asian equities and emerging markets,” he said.
As well as focusing on adviser views of margin lending, it also examined which lenders advisers preferred. The top three margin lenders were Colonial Geared Investment, with 43 per cent of planners saying it is their most used lender, while Macquarie Bank and BT drew for second with 14 per cent, and National Margin Lending third with 7 per cent.
The report is based on a survey of financial advisers in December 2006.
Recommended for you
As the year draws to a close, a new report has explored the key trends and areas of focus for financial advisers over the last 12 months.
Assured Support explores five tips to help financial advisers embed compliance into the heart of their business, with 2025 set to see further regulatory change.
David Sipina has been sentenced to three years under an intensive correction order for his role in the unlicensed Courtenay House financial services.
As AFSLs endeavour to meet their breach reporting obligations, a legal expert has emphasised why robust documentation will prove fruitful, particularly in the face of potential regulatory investigations.
