Stocks, bonds, ETFs, cash or cryptocurrency? What do financial planners prefer?

A new survey of financial planners has revealed which assets they most recommend to their clients, and how these recommendations have changed over time.

The 2024 Investment Trend Survey is Financial Planning Journal The Financial Planning Association (FPA) has shown that exchange-traded funds (ETFs) are the most frequently recommended and used investment vehicle by clients.

According to the survey, 88.4% of planners recommend ETFs. However, this is a slight decrease from 2023, when 90.1% of financial planners favored the asset class.

Meanwhile, 60.1% of financial planners said they expect ETF use to increase over the next 12 months. This compares to 49.7% who said that in 2023. Meanwhile, only 1.9% expect ETF use to decline in 2023. Next 12 months.

Cash is not king, but it is popular

Cash and cash equivalents, such as money market funds, are second on the list of preferred investments. The proportion of planners who say their clients hold cash increased from 76.4% to 81.3% in 2023.

Of course, this is not surprising, as more investors have sought the safety of cash in a high interest rate environment and with markets expected to remain sluggish after last year’s massive bull market rally.

But the stock market has actually been stronger than expected, which may be why fewer planners are recommending cash this year. Just 19.2% said they would encourage customers to hold more cash, compared to 24.1% in 2023.

Meanwhile, 29.3% of financial planners are telling clients to reduce their cash holdings, compared to 13.6% a year ago.

Stocks, Bonds and Mutual Funds

The survey also found that the percentage of planners recommending mutual funds, individual stocks, and individual bonds all increased in 2024.

Specifically, the proportion recommending mutual funds was 68.3%, an increase from 63.9% last year. Meanwhile, planners’ stock recommendations were 53.4%, up from 50.8% in the same period last year, and bond investment recommendations were 50%, a slight increase from 47.1% in the same period last year.

Additionally, 26.9% of planners proposed increasing their use of bonds in the next 12 months, compared to 23.6% in 2023. Additionally, 26.4% proposed increasing their stock holdings this year, up from 18.3% the previous year. Finally, 16.4% suggest increasing their investments in mutual funds over the next 12 months, up from 14.1% a year ago.

Of the three asset classes, mutual funds had the highest percentage of financial planners recommending investment reductions at 30.3%. However, this is an increase from 25.7% in 2023.

This shows that mutual funds continue to lose popularity compared to ETFs. Additionally, among financial planners, the proportion recommending a reduction in stock holdings increased to 20.2% in 2024, compared to 15.2% in the same period last year, and the proportion recommending a reduction in bonds increased from 10% to 13.5% in 2023.

Cryptocurrency and Economy

The analysis shows that financial planners are slightly more interested in recommending cryptocurrencies to their clients, although the numbers are still low. Specifically, 4.8% of them recommended cryptocurrencies, up from 2.6% in 2023.

However, while 4.8% of planners recommended increasing cryptocurrency allocations (up from 3.1%), 7.2% recommended reducing cryptocurrency investments compared to 4.7% a year ago.

Finally, financial planners are more optimistic about the economy this year than last year. On a scale where 1 is bullish and 5 is bearish, planners’ average outlook for the next six months is 2.5 compared to 3.3 for 2023.

The outlook for the next 12 months is 2.6 compared to 2.9 a year ago. Meanwhile, over the next five years, the score is again middling at 2.5.

The 2024 Investment Trends Survey was conducted from March 4 to April 3, and a survey was conducted on 208 financial planners.