Financial Advisors Up Allocations to Absolute Return Strategies, Brinker Barometer Finds

Private Equity and International Allocations Wane

BERWYN, Pa.--(BUSINESS WIRE)--Brinker Capital, a leading registered investment advisor, today made public the results of its fourth quarter 2012 Brinker Barometer® survey, a gauge of financial advisor confidence and sentiment regarding the economy, retirement savings, investing and market performance. Respondents were asked to reflect on key financial issues, including their clients’ retirement readiness, investing and the nation’s debt problems. An infographic of key findings can be found at: https://clients.brinkercapital.com/brinker/portal/web/cms/images/brinker_barometer_Q4_2012.pdf.

“put aside partisan differences and make decisions based on the good of the nation.”

“What a difference a year makes,” said Brinker Capital Vice Chairman, John Coyne. “Throughout most of 2012, financial advisors were pessimistic about almost every topic we asked, from market performance and clients’ retirement readiness to the economy and the outcome of the presidential election. Just 12 months later it appears as though advisors have breathed a collective sigh of relief that the election is over, the country has sidestepped the fiscal cliff and financial markets appeared to be performing in line with or ahead of advisors’ January 2013 expectations.”

Among some of the Brinker Barometer findings:

• Absolute Return (AR) strategies appear to be gaining acceptance and momentum among financial advisors. Almost half (48%) of advisors said they already use AR strategies in their client portfolios, nine percent said they do not but plan to do so this year, and 46% of those who indicated use of AR noted they will increase their allocation in 2013. Sixty-five percent of respondents said they view AR as a complement to relative return strategies, versus 23% who position it as part of a core/satellite strategy, and 12% who use it as a fixed income substitute.
• Asked how they access AR strategies for their clients, 57% of advisors said, “through separately managed accounts,” and 35% noted, “through mutual funds.” Only two percent of respondents access hedge funds directly on their clients’ behalf.
• In addition to upping their absolute return allocations in 2013, 54% of advisors plan to increase their clients’ equity exposure, and 48% said they will add to their emerging markets allocations. To underscore their bullish attitudes towards equities, fully 85% of advisors polled believe equities will raise more assets than fixed income in 2013, yet 51% of respondents plan to keep their clients’ fixed income exposure in line with 2012 allocations.
• Private equity and international investments were two areas in which advisors said they will decrease portfolio allocations by 65% and 57%, respectively.
• When asked about their confidence that in 2013 clients would be better able to stay on the path to retirement, the majority of advisors (54%) said they were “highly confident” or “confident.” 42% answered “somewhat confident,” and just four percent indicated they were “not at all confident.” When it comes to measuring how their clients are progressing towards financially viable retirement, 79% of advisors said they use investor-stated objectives rather than comparison to a traditional investment benchmark like the S&P 500.
• Turning briefly to the political landscape, 60% of respondents said that if they had to give President Obama one piece of advice related to the debt crisis, it would be to save money by “making cuts in entitlements.” Asked what advice they would give Congress, 65% of advisors said “put aside partisan differences and make decisions based on the good of the nation.”
• The use of social media appears to be on the rise among advisors, with 73% saying they have read financial or investing blogs in the past six months, 69% indicated increased usage of smart phones or tablets for work purposes, and 59% created or updated their LinkedIn profile.

About the Study

The Brinker Barometer^® was conducted online by Brinker Capital in February 2013. Results are based on responses from 438 advisors affiliated with insurance companies, independent broker-dealers and in sole practice. The study’s copyright is held by Brinker Capital.

About Brinker Capital

Brinker Capital, Inc. is a leading independent Registered Investment Advisor (RIA) that provides managed account investment programs to individual and institutional investors through financial advisors. Brinker was founded in 1987 by Charles Widger and is located in suburban Philadelphia. Learn more at www.brinkercapital.com and www.twitter.com/BrinkerCapital.