Security the No.1 priority say financial advisers

• 60% of advisers ranked ‘security’ (protecting assets) as their most important priority, up from 46% in July.
• Tracker survey reveals that security is increasingly the No.1 priority for clients
• FSCS limit impacting advisers’ recommendations
• Financial advisers divided on inflation predictions for 2017

In contrast, the number of respondents choosing regular and consistent returns on income as the most important priority, has dropped markedly – from a fifth (19%) in July to just 7% in October.

This question on the most important priority for clients asks respondents to rank in order a list of four responses: security (protecting assets); growth (achieving moderate returns); growth (achieving high returns); and income (regular and consistent returns). Security has been cited as the highest priority across all four quarters that NS&I’s survey of financial advisers has been conducted since February 2016.

Clear trends established in regard to the FSCS limit

The proportion of advisers that recommend their clients spreading their cash deposit savings around multiple UK providers – to stay within the FSCS threshold – has a trend of decline in 2016. In October, 66% of respondents chose this option (down from 76% in February). Conversely, the proportion of advisers recommending that their clients invest more of their money in NS&I products due to the HM Treasury 100% guarantee, has risen from 31% in February to 39% in October; however this is a drop from 45% from the last quarter, July.

Other key findings in this edition of NS&I’s Financial Advice Barometer are:

Financial advisers divided on inflation predictions for 2017

Advisers are split on their predictions for how much the cost of living will rise in the UK over the next six to 12 months.

The overwhelming majority of respondents (91%) believe that inflation is likely to increase six to 12 months from now. But opinion is divided over exactly how much the cost of living will rise over this period. 46% of respondents felt it would ‘increase significantly’ (to 2% or more, but to less than 3%) and 38% felt it would ‘increase slightly’ (to 1.5%).

Adviser confidence remains high

87% of advisers are currently either ‘very confident’ (32%) or ‘fairly confident’ (55%) about the future prospects for the financial advice industry.

This compares favourably to a score of 83% in the previous survey conducted in July. Since the Financial Advice Barometer began in February 2016, confidence among advisers in the industry has been consistently high, peaking in confidence in May with a score of 90%.

 Andrew Pike, Head of Intermediary Relationships at NS&I, said:

Danny Cox, Chartered Financial Planner at Hargreaves Lansdown, said:

“During uncertain times, helping investors keep their heads when all about them are losing theirs, is one of the adviser’s key skills. Portfolios built on firm cash foundations help achieve this and give both advisers and their clients peace of mind.”

Notes to Editors

1. NS&I’s Financial Advice Barometer is conducted by sending emails to around 4,000 financial advisers each quarter who are either registered on the Unbiased email mailing list or on the NS&I database. Respondents are entered into a prize draw for a chance to win an iPad mini.
2. For the October 2016 survey, 878 people opened the email and 91 people responded to the survey, giving a 10% response rate.
3. NS&I’s Financial Advice Barometer asks a series of financial advice market tracker questions each quarter to build-up a picture over time of how trends within the financial advice market change, including advisers’ sentiment towards cash, how it is used within client portfolios and advisers’ views on the wider cash deposit market.  Each quarter, one off topical questions are also asked.
4. As well as the Financial Advice Barometer, NS&I has been publishing its Quarterly Savings Survey since 2004. This survey of retail consumers provides a snapshot of how the nation is saving.
5. NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to more than 25 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.
6. For further information, please contact the NS&I media team.