FAs Not Buying Crypto


Survey: Financial Advisers Showing Continued Strong Preference
for ETFs and Nearly No Commitment to Cryptocurrencies

2018 Trends in Investing Survey shows where financial advisers are
investing today and where they plan to invest in the coming year

DENVER (June 5, 2018) – Exchange-Traded Funds (ETFs) are financial advisers’ top pick for the investment vehicle they most often use/recommend with clients, and their popularity does not appear to be waning. 2018 marks the fourth consecutive year that ETFs are the preferred investment vehicle among advisers, with 87 percent of financial advisers surveyed currently using or recommending ETFs with their clients—the most popular investment vehicle among 20 options, according to a new survey by the Financial Planning Association® (FPA®), the Journal of Financial Planning, and the FPA Research and Practice Institute™.

ETF usage has continued to climb over the last eight years when survey respondents first showed a significant jump in usage, with 72 percent using/recommending them in 2010 compared to just 44 percent in 2008.

The 2018 Trends in Investing Survey also showed that advisers continue to prefer a blend of active and passive management style (65%), which has been a consistent trend over the past five years. However, advisers are now showing a slightly higher preference for a purely passive approach moving from 15 percent of advisers in 2017 to 22 percent in 2018 who said a passive approach provides the best overall investment performance considering costs associated with each (active, passive, and a blend of the two) management style.

“With only 200 active ETFs out a universe of nearly 5,000, the continued rise in advisers’ use of this investment vehicle is clearly congruent with the uptick in their adoption of a purely passive approach to investing,” said Dave Yeske, DBA, CFP®, managing director of Yeske Buie and practitioner editor of the Journal of Financial Planning. “And while 65 percent of advisers continue to favor a blend of active and passive approaches, these results suggest that the ratio may be shifting in favor of passive.”

The 2018 survey, which was fielded online in April/May 2018 and received 265 responses by financial advisers of various backgrounds and business models, also indicated that 46 percent of advisers plan to increase their use or recommendation of ETFs with clients over the next 12 months – down slightly from 50 percent in 2017. No other investment vehicle showed this level of anticipated increased usage. For example, 19 percent plan to increase use of mutual funds (non-wrap) and 19 percent plan to increase use of individual stocks.

While ETFs continue to dominate among financial advisers, cryptocurrencies are proving to be one of the least used investment vehicles. Although 53 percent of advisers are responding to client questions about cryptocurrencies, only one-percent of advisers are using/recommending these investments. This low usage is likely to continue as only two-percent say they will increase their usage/recommendation of cryptocurrencies over the next 12 months.

When asked what they think of cryptocurrencies as an investment, just two-percent of advisers said they are a viable investment option that has a place in a portfolio. Twenty-four percent consider them a “gamble; only worth investing money you can stand to lose”; 29 percent consider them an “interesting concept to keep an eye on, but not invest in yet”; 18 percent say they are a “fad that is best avoided”; and 26 percent say they are “not a viable investment option.”

“It’s gratifying to see that, while 53 percent of advisers report fielding inquiries from clients about cryptocurrencies, only one-percent actually recommend this ‘asset class,’” said Yeske. “Another new data point in the survey that will be fascinating to follow in the coming years is the use of ESG funds, with more than a quarter of advisers currently recommending these investments and 20 percent planning to increase their use in the future.”

Other key findings from the 2018 Trends in Investing Survey:

  • 2018 marks the eighth consecutive year that cash and equivalents have been one of the most preferred investment options by advisers. Usage and recommendation of cash and equivalents shot up more than 30 percent between 2008 and 2010 and has exceeded a 74 percent usage/recommendation rate since that time. In 2018, 83 percent of advisers indicate that they use cash and equivalents. This trend may not end soon as 24 percent of advisers say they plan to increase their use/recommendation of cash and equivalents over the next 12 months.
  • Most advisers believe a 60/40 portfolio is still viable with combined 51 percent saying they are somewhat or very confident in the traditional 60/40 portfolio. Only five-percent are very doubtful these portfolios will continue to provide historical returns.
  • While 64 percent of advisers are continually re-evaluating the asset allocation in client portfolios, 32 percent say that the new tax reform (The Tax Cuts and Jobs Act) will spur them to review how their clients are allocated.
  • When it comes to advisers’ economic outlook, they appear to be more bullish about the economy in the short-term (20% are completely bullish for the next six-months) and more skeptical about the economy for the long-term with only seven-percent saying they are completely bullish for the next two years.

Of those surveyed, 78 percent are Certified Financial Planner™ (CFP®) professionals and 55 percent indicated that they work as an independent IAR/RIA. A full report of the 2018 Trends in Investing Survey is now available HERE and includes additional details and narratives.


About the Financial Planning Association
The Financial Planning Association® (FPA®) is the principal professional organization for CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals, educators, financial services professionals and students who are committed to elevating the profession that transforms lives through the power of financial planning. Through a collaborative effort to provide members with tools and resources for professional education, business support, advocacy and community, FPA is the indispensable resource in the advancement of today’s CFP® professional. Learn more about FPA at www.OneFPA.org and follow on Twitter at twitter.com/fpassociation.

About the Journal of Financial Planning
First published in 1979, the mission of the Journal of Financial Planning is to expand the body of knowledge of the financial planning profession. With monthly feature articles, interviews, columns, and peer-reviewed technical contributions, the Journal’s content is dynamic, innovative, thought-provoking, and directly beneficial to financial planners in their work. Learn more at www.FPAJournal.org.

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