The Markets July 2, 2012

Investor Sentiment Shows Slight 2Q Dip

Investor confidence softened somewhat in the second quarter, according to the Investor Sentiment Index, released Monday by John Hancock Financial Services.  
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The John Hancock Investor Sentiment Index remains in positive territory. Slight declines, to +19, from +21 in the first quarter, are because of less-optimistic views on equities. More investors are concerned about Eurozone debt and less worried about unrest in the Middle East.    

The Index shows that investors overall feel almost the same about investing this year compared with last year. In the same quarter a year earlier, the Index score was +18.

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Investing for retirement remains popular. Nearly eight in ten investors (78%) feel that now is a good time to be investing in 401(k) plans, and three-quarters (74%) have similar feelings about individual retirement accounts (IRAs). Investors felt about the same a year ago, with 80% saying the second quarter of 2011 was a good time to be investing in 401(k) plans, while 79% said it was a good time for IRA investing.

Investors’ views on most types of investments remain unchanged in the second quarter from the first. Attitudes toward balanced mutual funds were similar to the previous quarter, with 52% now saying that it is a good time to be investing in balanced mutual funds, a slight dip from 54% in the first quarter.

Blue-chip stocks will perform the best over the next six months of this year, said nearly 20% of investors. Small-cap stocks (picked by 16% of investors to perform best) were next, followed by emerging-market securities (14%). Only 4% of those surveyed believe international equities will perform well, with even fewer (2%) optimistic about government bonds. Investors believe that energy, technology and health care companies will provide the best investment opportunities in the next six months. Investors are more inclined than in the previous quarter to cite health care as a leading sector (47% compared with 42% last quarter).

 

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Among the key findings of the index:

 

  • Investors believe they are in a better financial position today compared with two years ago (42%). Half (50%) believe that, in two years, they again will be in a better financial position. This is a significant decrease from 57% in the previous quarter and 58% in the same quarter a year earlier.
  • Investors mention the value of their investments decreasing and being able to save enough retirement as their biggest personal financial concerns. Investors are highly confident in their ability to attain many lifetime financial goals, with paying off a mortgage (94%) and maintaining a financially secure retirement (90%) topping the list.

The John Hancock Investor Sentiment Index, conducted quarterly, is a quarterly measure of investors’ views on a range of investment choices, life goals and economic outlook, as well as their confidence in these areas. The second-quarter survey was conducted online by Mathew Greenwald & Associates. A total of 1,011 investors with household incomes of at least $75,000 and assets of $100,000 were surveyed May 14 to May 25. To qualify, respondents were required to participate to some extent in household financial decision making.

 

Products July 2, 2012

Commonwealth, IPS AdvisorPro Offer Investment Policy Software

Web-based software introduced by Commonwealth Financial Network and IPS AdvisorPro helps advisers create fully compliant investment policy statements.
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The software enables advisers to create investment policy statements (IPS) reflecting their firm’s philosophy and the unique circumstances of their clients. The adviser can update all previously created statements if the firm changes its investment policy.

A subscription to the service includes:

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  • Eight client-type investment policy statement templates, which are populated through corresponding questionnaires.
  • The ability to customize an unlimited number of additional templates.
  • 33 asset classes with which to create unlimited asset allocation models, each with historical return and standard deviation data.
  • A risk-tolerance questionnaire that scores responses using an algorithm.
  • Integration with MoneyGuidePro financial planning software and Redtail CRM.

“Investment policy statements are not only a prudent best practice in private wealth management, but they are critical to relationship management, as well as an effective marketing tool,” said Gavin Morrissey, vice president of wealth management at Commonwealth.

AdvisorPro co-founders Norm Boone and Linda Lubitz Boone added, in a statement: “In this era of financial services industry reform and a focus on a fiduciary standard of care, the use of an IPS has become critical for financial advisers. The investment policy statement is rapidly being embraced by the industry as the go-to document and record of the agreements between financial adviser and client about how their money will be invested to ensure compliance with new regulations and to protect the firm from liability exposure.”

Commonwealth Financial Network is a registered investment advsier and independent broker/dealer that was founded in 1979 and is headquartered in Waltham, Massachusetts, and San Diego. IPS AdvisorPro, founded in 2006 and headquartered in Miami, has more than 1,600 users and has created 37,000 investment policy statements.

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