Administration July 21, 2011

Adviser Clients Need More Info on Global Investing

July 21, 2011 (PLANSPONSOR.com) - Investors who work with a financial adviser are more likely than those who don’t to think of global investing as an important strategy for diversification, according to a recent survey from The Hartford.
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However, the survey found, there is confusion among the group about global and emerging markets (EM) investing.  

Sixty-two percent of investors who work with a financial adviser said global investing is an important way to diversify their portfolio, versus only 31% of those who do not work with a financial adviser. However, 27% of those who work with an adviser are unsure if global investing is important for diversification.  

According to The Hartford, while the majority of investors who work with an adviser think global investing is important, less than half practice what they preach:  

  • Only 46% own global or international mutual funds; 
  • More than one-quarter aren’t sure if they own global or international mutual funds; 
  • Only 42% own mutual funds that invest in EM; and 
  • Thirty-seven percent aren’t sure if they hold mutual funds that invest in EM. 

 

The survey also found investors who work with an adviser don’t understand their own global investments. When asked which global asset classes they hold in their portfolio, 57% indicated they don’t know.   

Many investors are not considering EM investments. Fifty-eight percent of those who work with an adviser do not own mutual funds that invest in emerging markets.   

The top three reasons they avoid emerging markets are:  

  • EM is too risky 38%; 
  • I don’t understand EM 38%; and  
  • Developed markets are less risky 22%.  

 

Investors who work with an adviser and who do own mutual funds that invest in emerging markets say the top three reasons are:  

  • EM can help diversify my portfolio 80%; 
  • EM is growing faster than developed markets 43%; and 
  • EM is a growing percentage of global GDP 38%.  

 

Overall, 92% of investors who work with an adviser are happy with the international investments they hold today. However, only 40% of the group working with a financial adviser said their adviser has discussed global diversification with them; 49% haven’t discussed global diversification, and 11% weren’t sure.   

Eighty-one percent of them would be “very” or “somewhat” receptive to a global diversification discussion with their financial adviser. 

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