Financial adviser’s confidence in the global economy rose to an above average score of 5.6 out of 10 in Q3 2012 – the highest recorded level over the past four quarters, according to the international financial adviser confidence survey* conducted by Skandia International, part of Old Mutual Wealth. This is an increase of 14% from a 12 month low of 4.9 last quarter.
In addition to global economic sentiment rising, financial advisers are generally feeling more positive about their local economies with a rise from 5 out of 10 in Q2 to 5.5 now.
Advisers working in Singapore have reported the highest confidence in their local economy for the third quarter running, with an average confidence level of 6.8. Interestingly, whilst Singaporean advisers are the most positive about their own economy, they reported the joint lowest sentiment in the global economy, along with European advisers, at just 5 out of ten.
The pessimism of European advisers understandably extends to their local economies, with advisers in Europe reporting lower local confidence levels now than in Q2 with a reduction from 4.2 to 4.1 this quarter. Along with UK advisers, respondents from Europe were the only group that felt the global economy was more positive than their local economies, which is likely to be a result of their proximity to the debt crisis.
Although the European debt crisis continues to be seen as the biggest threat to economic growth, this is no longer as dominant as it has been in previous quarters. This time just over half (55.7%) of advisers selected this as the biggest threat compared to nearly three quarters (73.5%) of advisers in Q2. This could be a result of the recent announcement by the European Central Bank to take further steps to boost the flagging economy.
Another change reported by advisers this quarter is in their clients’ appetite to risk. Over half (51.8%) of advisers have seen no difference in their customers’ attitude to risk, in comparison to the previous three quarters that have seen risk appetites plummet. Also, for the first time this year, a significant proposition of advisers (47%) believe that the economic instability is no longer having the same degree of detrimental effect on their customers’ investing behaviour. However, whilst levels may not have dropped, investor confidence has not yet heightened, with nearly a third of advisers (31.6%) believing that low consumer confidence is likely to be the biggest inhibiting factor to future business.
Phil Oxenham, marketing manager at Skandia International, comments:
“The findings of the survey show a slight shift in sentiment that indicates confidence may be starting to recover after a long period of decline. It is reassuring that advisers from Singapore remain confident about their local economy despite their uncertainty about the global economy. Whilst the European debt crisis and consumer confidence are still troubling advisers, there are signs that positive sentiment is, albeit cautiously, starting to emerge.”
* The quarterly international adviser confidence barometer was conducted by Skandia International, part of Old Mutual Wealth, in Q3 2012 and attracted responses from 348 advisers from around the world – Hong Kong, Singapore, UAE, UK, Europe, Africa, Latin America and Thailand.
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