Sentiment returns to pre-recession levels


|
The recessionary cycle and its impact on Australian financial planners appears to be over, but the psychological wounds are likely to linger, according to the latest data released by Wealth Insights.
The data reveals that the cycle of declining adviser sentiment coupled to financial failures and economic adversity began in February last year, reached its depths in February this year, and has now returned to the levels that marked the beginning of the cycle.
Wealth Insights managing director Vanessa McMahon said the new data gathered as a result of research conducted over the past month was representative of financial planners having breathed a deep sigh of relief.
“I think that in the depths of the downturn in February and March this year there was a real concern about how and when the markets might ultimately recover and the long-term implications for their businesses,” she said.
McMahon said while the most recent data pointed to a substantial recovery in planner sentiment, there remained sections of the industry deeply affected, not least those planners who had entered the business or acquired businesses just ahead of the downturn.
“In circumstances where they would have based their transaction on multiples of 3.5 times earnings, they have been badly affected,” she said.
McMahon said the recovery of the markets had also been particularly welcomed by planners operating in regional and country areas.
“Those guys were really feeling the impact in February and March,” she said. “In those small communities they tend to be much closer to their clients and it was clearly difficult for them when they found themselves running into clients in the street or in the supermarket.”
McMahon said while planner sentiment had now returned to more acceptable levels, some serious lessons had been learned and many remained extremely cautious.
“There is nowhere near as much confidence as there was 18 months ago, and many planners remain cautious,” she said. “That caution is particularly evident when you begin discussing asset allocation moving forward and goes some way towards explaining the
popularity of domestic equities.”
McMahon said while domestic equities had emerged as the big winner, planners had indicated that they would not be jumping into riskier asset classes soon or advocating high levels of leverage to their clients.
“I believe the past 18 months have left an indelible mark on planners,” she said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.