Financial planners are again listing exchange-traded funds as their number-one investment vehicle to recommend and use with clients, according to an annual survey.
The 2024 Trends in Investing survey by the Journal of Financial Planning and the Financial Planning Association tracks trends and challenges financial planners see in their work with clients. ETFs continue to dominate investment portfolios, with over 89% of respondents currently using or recommending these products, and 60% planning to use ETFs more in the next 12 months.
Financial professionals are bullish about the economy in the near term but have a less optimistic outlook over the next two to five years. Top client concerns include interest rates (75%), inflation (73%), and general volatility impacting their portfolios (62%).
Notable components of client portfolios are cash and equivalents (81%), non-wrap mutual funds (68%), individual stocks (53%), and individual bonds (50%). Individual bonds and stocks are most likely to see increased allocations over the next 12 months.
Over a quarter of advisors in the survey reported that clients inquired about insurance premium costs and confusion over product design or benefits, indicating a need for professionals to help clients better understand life insurance products and their role in portfolios. Term life insurance was the most used product (74%), with a strong demand for long-term care benefits. More than 40% of professionals are using or recommending linked-benefit LTC insurance for their clients. Advisors reported challenges in educating clients about product features (31%) and identifying suitable coverage (15%). They also raised concerns about administrative issues and poor servicing from life-insurance agents.
More financial professionals (29% in 2024, compared with 14% last year) say they expect to reduce their use of cash and equivalents. While confidence in the traditional 60/40 portfolio continues to be strong, those with doubts fell from 21% in 2023 to 16% in 2024.
Of those surveyed, 87% are Certified Financial Planner professionals, 55% indicated they work as an independent IAR/RIA, and 53% say they have more than 21 years of financial services experience. The 2024 Trends in Investing survey was conducted from March 4 to April 3 and received 208 responses.
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